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Nefe Emadamerho-Atori


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How to Prevent Fraud With Transaction Monitoring

Financial services are a core backbone infrastructure of every economy, and the new wave of digital finance and fintech products has made it even easier to conduct business and receive payments. However, these services are also a prime target for fraud and financial crimes like money laundering. As the threat of payment and transaction fraud remains an ever-present factor in the financial services sector, the fight against it would only won by the parties that stay ahead. How can fraud prevention be done proactively? The answer lies in transaction monitoring.

This article explains what transaction monitoring is, how it works, and its importance. 

What is Transaction Monitoring?

Transaction monitoring is a close surveillance of customers’ financial transactions, including deposits, purchases, transfers, and withdrawals. It is often combined with analyzing other customer activities to gain a comprehensive view of their financial behavior. 

By monitoring transactions over time, banks, fintech companies, and other financial institutions can identify suspicious patterns and predict future behaviors. This allows them to stay ahead of fraudulent activities and take appropriate action.

How Does Transaction Monitoring Work?

Let's consider this scenario: John Doe has an account on a fintech app and usually makes small transactions and receives funds ranging from $20 to $200. One day, he suddenly receives a credit of over $10,000. With a transaction monitoring system in place, this activity is flagged as suspicious because of the credit amount is not a usual one for the customer’s account.

compliance officer is then able to further investigate the flagged transaction to determine if it is genuine or if it should be reported to the appropriate authorities. The officer studies the flagged transactions to find out who the sender was and the intent of the funds. This helps them understand the nature of the transaction. 

Just like identity verification does not stop when the user gets onboarded, the transaction monitoring process is also a continuous activity, not a one-time event. The continuity of the process allows businesses to quickly detect changes in a customer's behavior and respond to those changes. 

Who Needs Transaction Monitoring?

While transaction monitoring is crucial for the financial services industry, other businesses can benefit from its implementation. Here are some businesses that need transaction monitoring.

  • Banks
  • Fintech businesses
  • Insurance firms
  • Proptech agencies
  • Lending businesses
  • Saving and investment businesses
  • BNPL providers
  • Cryptocurrencies
  • Brokeragesbehavior

Transaction Monitoring Challenges Businesses Face

As important as transaction monitoring is, there are some challenges associated with it:

  • Manual processes

Manual transaction monitoring processes become ineffective in the long run due to fatigue and human error. Also, tracking transactions and identifying suspicious activities becomes more challenging as the number of financial transactions performed daily increases. Businesses can solve this by leveraging an automated transaction monitoring solution that will help them identify suspicious behavior in real-time and overcome the limitations of manual processes.

  • Dealing with false positives

Many transaction monitoring systems come with preset rules, and as helpful as these rules are, they often generate inaccurate results. As high as 90% of the alerts that arise from preset rules could be false positives. These inaccurate systems sometimes flag legitimate transactions as fraudulent and fraudulent transactions as legitimate. Businesses end up wasting a lot of time and manpower acting on the inaccurate results the systems produce.

Businesses can deal with false positives by working with a transaction monitoring system that provides preset rules and allows them to create custom rules that fit unique use cases and scenarios. 

Automatically Secure Transactions With Dojah EasyDetect

Fraud prevention does not end after onboarding a user. If anything, it has only just begun. Needless to say, there are bad actors who will always try to game your system through loopholes that may exist.

An example is a user creating multiple fake accounts with stolen and forged BVNs. They then go on to perform several transactions between these accounts. This is a common way fraudsters game platforms that run campaigns like referral bonuses.

You can reduce the risks of fraud and secure your payments by working with EasyDetect. It is Dojah’s proactive anti-fraud transaction monitoring solution that enables you to identify and block potentially fraudulent activities before they occur.

Dashboard of EasyDetect - Dojah's Fraud Prevention and Fraud Detection solution
EasyDetect Dashboard

Features of EasyDetect

EasyDetect’s features include:

  • Ability to define and build automated rules to block suspicious activity and minimize false positives.
  • Gathering insights about suspicious user behaviors to create even more effective rules. This allows you to respond to changes in fraudulent behavior and stay one step ahead.
  • Freedom to customizable rules, events, and conditions to fit different customer onboarding and transaction monitoring use cases.
  • Machine learning integrations that further enhance its monitoring capabilities beyond the custom rules you set. This means it analyses the user's data and behavior and spots any conditions you may not have considered when setting the rules.
  • Automated alerts for suspicious activity. EasyDetect can send real-time notifications via email, Slack, or through your dashboard. These real-time alerts allow you to respond quickly to suspicious activity, boosting the security of genuine users and your platform.
  • Automatic tagging and flagging of fraudulent activity and risky behavior for you, eliminating the need for manual reviews. It also increases your overall efficiency by automating the decision-making process.

Ready to stay one step ahead of fraud with EasyDetect? Then we have exciting news for you. We currently have a limited offer of 10,000 free transaction verifications. This means that you can verify up to 10,000 transactions for free. Also, once the free credits expire, you can still enjoy discounts from other services on our platform.

Take advantage of this limited-time offer and get started with EasyDetect today. Fill out this form to apply. Our team will review your application and get back to you if you qualify.

Contact us at [email protected] if you have any questions. Also, visit our documentation to learn more.

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