Fight Back Against The Escalating Cost of Payment Card Fraud With Better Testing

Payment card fraud has become a fact of life. As digital transactions surge and cybercriminals grow more sophisticated, financial institutions and payment processors face mounting pressure to safeguard every interaction. From card-present transactions to online payments, the attack surface has widened dramatically.

To bolster its defenses against this ever-growing threat, all payment industry participants must look beyond reactive fraud tools and attack fraud at its very foundation.

Effective Payment Testing is Key

Thorough, consistent, and proactive payment testing helps organizations validate their systems under real-world and adversarial conditions. It's not enough to test when launching a new product or integration. Ongoing testing reduces blind spots, enhances fraud detection systems, and prevents the types of failures that fraudsters exploit.

"Fraudsters don't break systems. They exploit the gaps between them. Testing is what finds those gaps."

—Julie Conroy, Head of Risk Insights, Datos Insights

The Real-World Cost of Fraud

The numbers speak for themselves:

• According to the 2024 Nilson Report, global card fraud losses are projected to hit $48 billion annually by 2030.
• The Federal Trade Commission (FTC) reported over $10 billion in fraud losses in 2023 in the U.S. alone, a 14% increase over the prior year.
• Financial institutions are absorbing more liability, especially with the rise in peer-to-peer (P2P) scams and synthetic identity fraud.

Testing: Your First Line of Defense

Fraud prevention often focuses on detection, utilizing rules engines, AI modeling, and behavioral analysis. But prevention starts earlier.

Rigorous payment testing ensures that systems behave predictably even when presented with malformed, duplicate, or suspicious messages.

Effective payment testing can:

• Simulate known fraud tactics
• Ensure transaction monitoring rules trigger as expected
• Verify authentication flows across devices and networks
• Validate proper message structure and routing for payment types

Close Exploitable Loopholes

Many fraud attempts rely on poor message validation. Whether it’s a missing field, an unexpected value, or a duplicate transaction, these weaknesses often slip through in environments lacking thorough payment message testing.

When organizations enforce proper message validation logic across acquirer, issuer, and gateway endpoints, they:

• Block malformed or spoofed messages before processing
• Prevent logic bypasses and field manipulation
• Reduce false positives by refining fraud rule accuracy

Testing & Operational Resilience

Resilience isn’t just about system uptime. It’s the ability to detect, isolate, and recover from threats without compromising performance or security.

Testing plays a pivotal role in several ways:

• Faster recovery: When a fraud incident occurs, automated and well-tested systems recover quicker because failure points are known and documented.
• Better monitoring calibration: By testing under both load and fraud scenarios, teams improve alert quality, reducing both false positives and missed events.
• Audit readiness: Regulators increasingly require financial entities to demonstrate proactive testing as part of operational resilience programs.

Building operational resilience starts with improving visibility, and improved visibility comes from better testing.

Use Testing Assets to Fight Fraud

Forward-thinking financial institutions recognize that fraud prevention must be baked into the testing process. This includes:

• Creating fraud-centric test cases for QA teams
• Integrating fraud rules into continuous testing workflows
• Using test environments that mimic production fraud volumes and patterns
• Measuring fraud detection logic as part of performance metrics

Paragon's payment testing tools support these strategies by enabling real-time message simulation, rule validation, and continuous regression testing.

Take Back Control

At a macro level, the incidence of fraud will continue to rise, as will the cost. But organizations that treat payment testing as a core element of their fraud strategy gain an advantage. They detect anomalies sooner, validate defenses proactively, and maintain the trust of customers and regulators alike.

Want to see how your fraud resilience can improve through better testing? Schedule a consultation and explore how Paragon can help your teams move from reactive to resilient.