How to Combat Mobile Money Fraud Risk

Global Emergence of Mobile Money 

The innovative new ewallet and mobile transaction solutions provide new ways for citizens around the world to access financial products and services, creating exciting new opportunities to boost financial inclusion.   

This opportunity has evolved notably in recent years, with significant changes triggered by the COVID-19 pandemic. Up to 15% of all payments made through mobile money operators during the pandemic were from first-time users, and international remittances processed through mobile money providers increased by 65% according to some analysis. 

A rapid shift in industry dynamics, particularly when considering cross-border payments, also reflects a huge need to embed appropriate fraud protection and anti-money laundering systems to ensure this powerful new opportunity is not abused. 

Neural Technologies had been working with mobile money service providers (MMSPs) for decades, to offer an effective, scalable solution to help maintain trust and transparent transactions within this exciting and emerging mobile money ecosystem. 

Mitigate Mobile Money Fraud Risk

There is a wide range of money laundering and fraud risk when it comes to mobile money. The most obvious risk comes from the sheer speed of development, adoption, and proliferation of mobile wallet solutions, creating fresh new opportunities for fraud. 

The sheer number of mobile phones in circulation creates a clear channel risk for safe delivery of mobile payment services. Meanwhile, new and potentially naive consumers entering the market creates vulnerable customers at higher risk of fraud.

Providers with large agent networks also face risks in ensuring appropriate systems are in place, helping balance that powerful opportunity to expand financial inclusion against appropriate data monitoring. 

Ensuring robust know-your-customers (KYC) and compliance checks is challenging in an unbanked population with limited financial histories. The consequences include difficult adoption of fraud risk and anti money laundering (AML) initiatives. This is also often reflected in the maturity of the local regulatory system, which can itself offer loopholes which mobile payment fraud criminals can benefit from. 

Finally, the system itself must be managed appropriately, with good data monitoring to ensure valid systems access which is vital to reduce fraud. Introduction of effective, automated fraud management systems are a vital piece of this puzzle to detect fraud and AML risks. 

Mobile network operator industry association, GSMA recommends a four-step approach to manage these risks in mobile wallet ecosystems:

  1. Determine your risk appetite
  2. Identify and assess key risks
  3. Establish effective controls to prevent and detect risk
  4. Monitor and review risk management strategy

With a flexible approach that can be adapted to your unique operating environment, Neural Technologies’ Revenue Protection suite offers effective solutions that can help your business adhere to this critical mobile wallet fraud protection strategy.

How Neural Technologies’ Solutions Help to Tackle Fraud Risk

Neural Technologies’ advanced Fraud Management and Anti Money Laundering (AML) solutions leverage AI and machine learning technologies to provide comprehensive revenue protection programs for mobile wallet risks. It allows users to process any kind of mobile money transaction, including top-ups, payments, transactions, and withdrawals. 

Our solutions incorporate sophisticated KYC technologies to help mitigate fraud risk in mobile money transactions, backed by comprehensive transaction data monitoring and automated analysis to ensure ongoing oversight of mobile transactions. That offers a way to address early mobile wallet risks.

Cross-references individual fields and activity data against historical data across defined time periods and activities, providing a holistic view that can incorporate the lifecycle of an individual customer. This is a particularly powerful solution to the needs of a high-volume landscape, and offers an evolving solution to mitigate risks, aligning with GSMA’s pillar of establishing effective controls to prevent and detect risk.

Advanced link analysis built on our neural network technologies allows rapid identification of fraudulent transactions and bad actors, while also matching against sanction lists to ensure AML and CFT compliance. 

Neural behavioral modeling is implemented alongside traditional rules and threshold-based techniques, providing adaptive and predictive fraud protection that improves detection rates and reduces false-positive ratios.

Predictive analytics allows mobile money operators to analyze the actions of both customers and non-customers, providing a complete view of both existing and emerging fraud risks. It can also be adapted to cover internal fraud monitoring, providing a solution which addresses some of the risks highlighted in case studies from around the world. 

Clear visualization capabilities equipped in the solution can quickly assess link analysis and output, in both tabular and graphical form, with reports able to be generated in line with statutory requirements. This is vital for ongoing monitoring and review of fraud management systems.  

The world of mobile money is rapidly evolving, and offers a remarkable opportunity for improved financial access and new modes of transactions around the world. Mobile money operators need to ensure in delivering this opportunity, they embrace effective fraud detection, protection, and AML solutions.

Get in touch to discover how Neural Technologies help to safeguard your mobile money operations

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