This white paper gives an overview to merchants using carrier billing on how Fortumo prevents fraud with carrier billing and what additional steps merchants can take to avoid it. In general, fraud with carrier billing is significantly lower than with credit cards for two primary reasons:
Paying with carrier billing is safe for consumers: in order to confirm an online payment, there needs to be physical access to the device (SIM card) to which the payment is being charged; this means card-not-present fraud is extremely complicated with carrier billing and such fraud rates are much lower with credit cards
Friendly fraud (chargeback fraud) is not widespread with carrier billing due to the fact that carrier billing is primarily used for the sale of virtual and digital goods; such digital goods can be withdrawn from consumers; in case of refund requests users who request refunds can be blocked from making future payments, making chargeback fraud an unpopular approach with carrier billing
This however does not mean fraud as a topic can be ignored by merchants when using carrier billing. In this white paper, we have listed 6 practical steps merchants can take to mitigate and prevent carrier billing fraud on their services.