The Reason Why Online Transactions are a Target for Hackers

The reason why online transactions are a target for hackers

The development of the Internet and technology has enabled us to change various things in our lives. For example, one of the tremendous changes was that, after many years, people from underdeveloped areas finally got access to financial services. It also made it easier to communicate with our loved ones who are now just a tap away from us; we can even see them on our screens instead of just hearing them. Could you imagine waiting for a letter from your family or friends living abroad to discover what is happening with them, instead of just using messenger apps to call them and see them in real-time? That was a reality for people just a few decades ago; now, they are closer to us than ever. These are just a few of the benefits these developments brought to us.

Rise of E-commerce

Individuals were not the only ones who experienced the benefits these developments brought, as companies have also been updating their business technologies to reach more people. One of the business sectors that experienced the most significant change was retail, with most of the eCommerce companies undergoing digital transformation and transferring their operations online. This made it easier for retailers to reach more customers and allowed individuals to conduct their shopping quickly and efficiently online. At the same time, this change has allowed hackers and fraudsters easier access to their victims, increasing the number of transaction frauds. In 2021. estimated e-commerce losses to online payment fraud were 20 billion U.S. dollars, which is an increase of 14 percent compared to the previous year. Unfortunately, this number just keeps on growing, year by year.

Dangers of E-commerce

The introduction of online transactions has brought various benefits to businesses and customers, from more efficient and quicker sales to a broader product reach. Unfortunately, the hackers also want to use them and profit from unsuspecting victims. Every business dealing with finances needs to start introducing transaction fraud prevention into their security strategy if they want to remain safe. Hackers and fraudsters are constantly on the lookout for targets that can make them big profit as fast as possible and by investing the least possible effort. This is why they prefer targeting the e-commerce sector, as many companies that work in retail are not proactive about their cybersecurity strategy. By knowing the financial fraud risks you will face, you can take steps in the right direction and protect your business and its customers.

What is transaction fraud?

Online payments have become one of the most popular payment forms in the world today. Research by Experian claims that over 90% of consumers worldwide use online payment when purchasing goods and services. Unfortunately, this brings risks of becoming a victim of transaction fraud to any business dealing with finances. Transaction fraud happens when fraudsters and hackers gain access to another person’s payment information and use that information for unauthorized transactions or purchases. This is often not noticed by legitimate card owners until they check their bank statements and discover unauthorized transactions. When they discover the unauthorized transaction, they will raise a chargeback request that is often damaging for the affected business. Once the business settles the dispute and refunds the legitimate card owner, they will also have to pay different fees such as chargeback and investigation fees and face the loss of the purchased item, its revenue, and their time. This is why any business dealing with online payments should concentrate on stopping the transaction fraud before it happens instead of just reacting after the fact.

Why do hackers target online transactions?

The E-commerce industry is often a target of hackers due to various factors, from the low level of security and large amounts of sensitive data to their connection with payment services. This gives fraudsters different opportunities for utilizing their malicious actions.

By gaining access to users’ payment details, they can purchase goods and services from companies and disappear with the money before anyone realizes it. Hackers and fraudsters prefer conducting an online transaction fraud rather than a physical one since there is a higher chance they will be successful. For example, at the physical shop, you can see your customer, recognize any suspicious behavior and verify they are a card owner by checking their ID and signature or confirming the transaction with a PIN. Unfortunately, verifying the cardholder’s identity online can often be very challenging, making it easier for hackers to trick you. In recent years there has been an increase in the development of successful identity verification tools that can change this, but more often than not, small retail businesses haven’t embraced them yet.

Most card owners don’t check their bank statements regularly, making that a considerable benefit of transaction fraud for hackers and fraudsters. This way, they can conduct their fraudulent activities and be long gone before anyone notices something happened, leaving legitimate card owners and affected businesses to deal with the aftermath.

Additionally, the ease and convenience of online transactions allow fraudsters and hackers to test out a large list of stolen credit cards. This way, they can quickly check which ones are still valid since they would be able to complete transactions only with cards that are still active. Once they know this, they can use them to achieve more fraudulent transactions until the legitimate card owner discovers what is happening and blocks the card or until they are stopped by the cybersecurity system of the targeted company.


The rise of online payments has changed the way most businesses conduct their payment protocols and allowed customers to do their shopping from the comfort of their homes. While this made lives easier for both parties, it also increased the risk of transaction fraud. Hackers and fraudsters are constantly updating their fraudulent activities, so they can be harder to detect while reaching more targets. The rise of online payments has given them that opportunity. Now they can conduct their fraudulent activities in a matter of seconds and be long gone with stolen goods or money before anyone discovers what happened. Businesses and individuals can no longer ignore what is happening and keep reacting after the fact. It is time to start taking proactive steps to ensure that fraudsters don’t get the upper hand and that everyone is safe online.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.