Understanding and Preventing Payment Fraud in 2025

While digital payments benefit consumers and businesses, payment fraud presents an increasingly significant risk. More and more sophisticated techniques are being used to steal payment information. In 2024, Malaysia recorded the highest rate of personal data leaks among Asian markets. As such, it is crucial to protect your business and customers by understanding how these frauds works and consequently implementing effective prevention strategies.

Common Types of Payment Fraud

1. Chargebacks

A chargeback occurs when a customer disputes a transaction with their bank or credit card issuer, leading to the reversal of funds from the merchant’s account. While chargebacks are designed as a consumer protection mechanism, they can sometimes be exploited and used fraudulently in what is known as “friendly fraud.“

Chargebacks may result from genuine issues such as unauthorised transactions, non-receipt of goods or services, or product quality issues or dissatisfaction.

In cases of friendly fraud, however, a customer might intentionally dispute a legitimate transaction after receiving the goods or services, claiming they never made the purchase or that the item was not delivered as expected. For example:

• A customer buys a digital product, uses it, and then files a chargeback claiming it was never delivered.
• A family member makes a purchase with the cardholder’s permission, but the cardholder later disputes it as unauthorised.

These actions can cause financial and reputational damage to merchants, making it crucial to identify and prevent such behavior

2. Identity Theft

Identity theft involves fraudsters stealing personal information, such as credit card numbers, identification details, or login credentials, to make unauthorised purchases or gain access to financial accounts.

3. Unauthorised Transactions

Fraudsters can gain access to payment information through various means, such as:

• Phishing scams are deceptive emails or messages that trick individuals into revealing sensitive information.
• Card skimming through devices illegally capturing credit card data at ATMs or payment terminals.
• Data breaches include hacking into databases to steal customer payment details.

Now that we’ve figured out the common types of payment scams, what about the solution? 

Strategies to Combat Payment Fraud

1. Implement Chargeback Management

Chargebacks can be costly and time-consuming for merchants. As such, to minimise their impact, businesses should:

• Keep detailed transaction records, including receipts, invoices, and delivery confirmations.

• Respond promptly to chargeback disputes with clear evidence to support legitimate transactions.

• Use chargeback prevention tools and fraud detection software to flag suspicious transactions.

2. Stay Informed About Fraud Trends

Fraud tactics evolve constantly, so businesses must stay updated on the latest threats and prevention measures by subscribing to industry publications or fraud prevention forums. Security training and awareness programs may also be effective in tackling fraud trends. Lastly, payment processors like Curlec can help with adopting new security measures for payment-related matters.

3. Strengthen Customer Communication

A transparent and responsive customer service approach can prevent misunderstandings and potential disputes. To enhance trust and security, businesses should:

• Provide clear and detailed transaction confirmations.

• Maintain accessible support channels to address customer concerns promptly.

• Educate customers about secure payment practices and how to recognise fraud attempts.

Elevate Your Payment Security

Payment fraud is a growing threat that businesses cannot afford to ignore. At Curlec, we help businesses stay one step ahead with our secure and intelligent payment gateway. Our solutions are built with advanced fraud detection features, real-time monitoring, and end-to-end encryption to ensure every transaction is protected. Investing in a secure payment infrastructure like Curlec is a smart move toward a safer, more resilient digital economy.