We live in a digital era, where we are using technology daily. And in this technological age, fraud is an increasing concern for businesses all over the world. But the fraud detection capacities that many companies are looking for, could be performed by a cutting-edge technology called Blockchain.
Blockchain is a shared ledger that is decentralized and immune to manipulation. It enables confirmed users to store, view, and share digital information in a security-rich setting, which serves to promote trust, accountability, and transparency in business relations. Attempting to gain on these benefits, companies have been searching for ways to use Blockchain technology to prevent fraud in industries such as finance, identity management, and supply chain.
Blockchain for fraud prevention in payment processing
Today, with the help of new-age technology, attackers are developing their fraudulent systems. Therefore, using a technology that can fight and prevent any scam systems is necessary.
Decentralization is what makes the Blockchain stand out from other security solutions. In various networks worldwide, Blockchain tracks payment data, independent of intermediaries or middlemen. This guarantees that no system failure occurs. Plus, the members of the Blockchain network will be warned if someone attempts to interfere with the data.
Besides decentralization, immutability is another compelling feature of blockchain. It is difficult to erase or alter any data that is stored on a blockchain. If a member wants to store new financial data, must go through a confirmation process. After authentication, the payment data can be placed into the chain. Any new block that is added to the chain would not impact the previously stored blocks.
High-level visibility is another important feature that blockchain is popular for. Blockchain stores all the transaction data in a decentralized ledger. Due to that, the stored data can not be harmed. Besides, users must first identify themselves in order to search, track, or connect any supplementary data to a blockchain network. They need to enter a code for authentication, which is hard to hack. By any chance, the users would know about it, if an attacker happens to enter the network and alter the data. Users will access a full history of transactions, which will help them know whether hackers have accessed their private data.
Preventing fraud in a supply chain
While financial institution-related fraud appears to get more media coverage, supply chain fraud is just as much, if not more, of a problem. There are a lot of gaps in which fraud can be conducted and go unobserved since supply chains are complicated and typically include several people and mechanical components.
Through greater transparency and increased product traceability, Blockchain can help to decrease and even eradicate fraud in the supply chain. The Blockchain, which is an immutable record that can only be modified and controlled by agreement among network participants, is very hard to manipulate. And if a product is digitized on a blockchain, since the information is on a decentralized, shared ledger, it can easily be traced back to its roots.
You can read more about the main ways Blockchain can transform the supply chain in our article: How Blockchain can Completely Transform the Supply Chain
In order to fight payment fraud, businesses should seriously reconsider their security solutions and take into account leveraging blockchain. This way, by optimizing customer service, businesses can create brand loyalty, which will eventually bring higher sales.