8 payment fraud prevention controls for 2026

Payment fraud happens when someone steals another person's payment information—or tricks them into sharing it—to make false or illegal transactions. As a financial decision-maker, protecting your revenue and customer data is a top priority.

The 2026 AFP Payments Fraud and Control Survey reports that 76% of organizations were victims of payment fraud attacks or attempts, costing businesses billions of dollars globally. Today, criminals use sophisticated networks and automated tools to exploit vulnerabilities. To fight back, you need defensive solutions that are just as advanced. By leveraging proactive security measures, you can engage in merchant fraud prevention and stop bad actors before they impact your bottom line.

1Transaction monitoring

Dynamic transaction monitoring solutions help you monitor risk in real time. By strengthening these systems with advanced analytics and automated screening, you can process large datasets quickly and efficiently. Risk-based alerting helps prioritize activity by severity, reducing operational costs and false positives while helping your team detect fraud faster.

Mitigate this potential threat by upgrading your payment gateway to one with advanced fraud detection capabilities. These modern tools can identify unusual purchasing patterns and flag suspicious activity, all while helping keep the checkout process smooth and secure for your customers.

2Multifactor authentication

Account takeovers occur when a hacker gains direct access to a customer's account. Once inside, they can use stored credit cards or request replacement cards. Relying on passwords alone is no longer enough to keep these accounts secure.

It's smart to require strong passwords, but you'll want to go a step further by turning on multifactor authentication for every customer account and internal system. Sending a one-time code to a phone or using an authenticator app makes it much harder for bad actors to break in. Just this one added layer can stop most unauthorized login attempts before they start.

3Secondary channels for payment approvals

Business email compromise is a scam where emails trick employees into transferring money to fraudulent accounts. A scammer might impersonate a high-level executive or a known vendor, requesting an urgent wire transfer to a new bank account.

Build a straightforward payment approval process that your team can rely on. Whenever there's an unusual or updated payment request, have your team confirm it using a different method, like picking up the phone or speaking in person. This extra step helps catch suspicious changes, such as sudden updates to vendor payment details, before any money moves.

4Tokenization for cardholder data

Data breaches expose customer information, which fuels the entire ecosystem of payment fraud. If a hacker infiltrates your database, they look for raw credit card numbers to sell on the dark web.

It's best to avoid storing raw credit card data on your own servers. Instead, rely on tokenization to turn sensitive payment data into a unique, random code in order to keep that information safe.

5Employee training to spot social engineering

Fraudsters frequently use phishing to deceive people through psychological manipulation. They send emails or text messages that look legitimate, tricking your employees into disclosing login credentials or downloading ransomware. Technology alone can't stop human error.

Make sure your employees know how to spot and report suspicious messages. Train them to watch for things like urgent requests, strange spelling mistakes or odd links. Keep security top of mind by holding regular training sessions and running practice phishing tests to see where your team could use a little extra support.

6Velocity checks

Bank identification number attacks don't require the theft of personal information. Fraudsters use algorithms to automatically generate and test a series of possible card numbers. They attempt thousands of micro-transactions until a valid card goes through.

Have your team keep an eye on how quickly transactions are happening on your site by using velocity checks. Should they notice a sudden burst of small purchases or see multiple declined cards coming from the same IP address, your system can temporarily block that user. This simple action can quickly shut down automated attempts before they become a bigger problem.

7Monitor behavioral deviations

Fraudulent behavior often looks very different from typical customer behavior. Recognizing red flags is crucial for stopping fraud before goods are shipped or services are rendered. Atypical behavior is a strong indicator of illegal activity.

Encourage your team to look out for anything that seems off from a typical customer's behavior. This might include unexpected international orders, transactions much larger than usual or purchases in categories you don't often see. Setting up automated alerts for repeat returns or an unusually high number of orders can help you spot problems early and protect your business.

8Solid documentation

Chargeback fraud happens when a customer disputes a legitimate transaction. They might claim they never received the product or that the purchase was unauthorized. You may lose the revenue, lose the product and pay additional penalty fees.

Make it a habit to keep your records organized and easy to access. Hold onto your shipping receipts, delivery confirmations and any customer communications. When you have a clear refund policy and share it upfront with your buyers, you equip yourself to resolve any disputes quickly. Being prepared with solid documentation can make all the difference if you need to contest a chargeback due to friendly fraud.

The bottom line

First Citizens Bank offers streamlined merchant services to ensure prompt receipt of customer payments with competitive pricing and no hidden fees. Get instant authorization and next-business-day funding while your sensitive cardholder data is safely handled and stored. Backed by technology partners, we help you stay on top of compliance requirements so you can stay focused on growing your business.