Stripe is a digital payment solution that revolutionizes the way businesses accept customer payments. With the tool integrated into your online platform, you can receive payment for goods or services from credit or debit cards.
The platform’s ease of use and simple setup aren’t the only features that appeal to many online merchants and entrepreneurs, as Stripe also works to help organizations prevent payment fraud. This is because fraudulent card payments in the U.S. have skyrocketed, reaching about $11.91 billion in losses in recent years—and this figure is projected to increase.
In this article, we’ll explore Stripe fraud prevention efforts and smart solutions for businesses to combat Stripe credit card fraud.
What Credit Card Fraud Is and How It Affects Businesses
Credit card fraud involves the unauthorized use of credit cards or card information for illegal purchases, posing a threat to businesses. Common types include:
- Skimming
- Phishing and vishing
- Card-not-present (CNP) fraud
- Credit card theft
Online businesses that rely on digital payment solutions like Stripe are particularly vulnerable to CNP fraud. In CNP fraud, bad actors steal credit card information and use it to pay for transactions without physically having the card.
Scams like this often lead to severe financial losses for cardholders and businesses and even damage customers’ trust in businesses’ reputations and online payment systems. This is where Stripe comes in to help.
How Does Stripe Prevent Fraud?
To fight credit card fraud and other related crimes, Stripe launched a fraud detection solution in 2016—Stripe Radar. The solution flags suspicious transactions before they’re processed, shielding businesses from losing funds. According to Finn Borge, Product Manager at Slice, Radar cut the company’s fraud rates by 70%, helping it save thousands of dollars.
If you run a business and want to reduce fraud risks, learn how the fraud protection tool works in detail.
How Does Stripe Radar Work?
The built-in Stripe fraud solution is powered by machine learning to provide real-time fraud protection and prevention for businesses that use the payment service.
Stripe Radar’s algorithm delivers high-level precision in fraud protection because it’s trained on robust data obtained from processing payments for millions of companies in 197 countries. This data enhances the tool’s ability to spot anomalies in transaction patterns, distinguish fraudsters from customers, and detect potentially fraudulent transactions.
Stripe Fraud Prevention—How Radar Helps Your Business
Stripe Radar provides a customized fraud solution for your business because it quickly adapts to your unique needs and changing fraud trends.
Here’s how its key features can help your business detect and deflect Stripe scams:
| Stripe Radar Feature | How It Helps |
| Machine learning | Radar scans thousands of signals on the Stripe network to detect fraud before it hits your business |
| Customer identification | The tool effectively distinguishes fraudsters from customers, allowing legitimate buyers safe transactions |
| Zero code | As a built-in Stripe feature, Radar doesn’t require writing code to integrate it into the platform before protection kicks in |
| High-level accuracy | The tool relies on multi-layered data, like payment and financial partner info or buyer patterns on your website, to accurately predict fraud |
| 3D Secure Standard | Radar uses extra authentication standards and protocols to provide additional security for customers and reduce fraud risks |
As effective as Radar is for fraud protection, it doesn’t offer the ultimate level of fund security.
Locking your funds in an account like FortKnox that’s impenetrable to hackers offers the highest level of protection—it safeguards your money even if scammers somehow evade Radar’s system.
