The rest of 2024 promises a dynamic and challenging environment within the interconnected world of fuel, fraud, and payments. Sustainability concerns are reshaping the fuel landscape, with electric vehicles (EVs) taking centre stage and demanding eco-friendly solutions. This surge in EVs necessitates the development of more unmanned charging stations, which in turn attracts opportunistic fraudsters who exploit vulnerabilities in data collection methods and security protocols.
Meanwhile, convenience remains paramount as mobile wallets continue to rise as payment methods. While offering increased security and efficiency, these “tap-and-go” methods haven’t eliminated fraud, as they often interoperate with physical cards, creating additional vulnerabilities.
Despite advancements in security, a concerning trend is on the rise: “Abuse of genuine fraud.” This deceptive tactic, where someone claims legitimate transactions as fraudulent, is expected to grow. Identifying and mitigating this complex fraud type necessitates sophisticated AI-powered scoring systems and the ability to analyse industry-specific data meticulously.
Further complicating matters is the issue of overclaiming and opportunistic fraud. Sometimes, even honest customers can mistakenly report legitimate transactions as fraudulent, artificially inflating fraud values by as much as 25%. This impacts the bottom line, disrupts business strategies, and throws AI scoring systems off balance. To combat these issues, pinpointing the root cause of the confusion and differentiating genuine behaviour from fraudulent activities becomes paramount.
The security of EV charging stations, both virtual and physical, must be prioritized. These critical infrastructure hubs are susceptible to fraud. The industry must take proactive measures like implementing robust security protocols, patching systems regularly, and educating users about potential scams to avoid falling victim.
Beyond the Challenges, Opportunities Await
While addressing these challenges is crucial, it’s vital to acknowledge the exciting opportunities that lie ahead. Combating overclaiming requires developing effective strategies that can discern genuine behaviour from fraudulent claims. While mobile wallets offer undeniable security benefits, strengthening initial provisioning processes through stricter card verification steps can further mitigate fraud risks.
Looking beyond individual solutions, leveraging machine learning and predictive modelling in fuel payments holds immense potential. These sophisticated tools can generate probabilistic scoring models that identify known fraud actors and suspicious activities by analysing individual account behaviour, consortium-level trends, and fleet-specific patterns. This enables real-time decision-making during authorisation requests.
The broader fleet payments market is also buzzing with innovation. The move towards open-loop payment capabilities unlocks wider customer purchase opportunities and interchange revenue streams for issuers, but it also necessitates enhanced security measures to counter the increased fraud risks associated with broader acceptance.
Fuel and mobility companies, vehicle manufacturers, and retailers will need collaborate to mitigate those threats, drive innovation, and adapt to changing consumer behaviour. Engaging directly with end users and fleet managers, fostering community building, and actively promoting brand interaction through mobile apps will be crucial for differentiation in a competitive market.
Convenience retail and EV charging present attractive avenues for collaboration and expansion. We see fuel retailers partnering with major high-street brands, such as Tesco petrol stations, teaming up with Costa Coffee to offer integrated and convenient experiences.
The future of payments might even reside within the vehicle itself. Pioneering initiatives like Mercedes integrating payment choices directly into their cars demonstrate the potential of car-as-payment mechanisms.
Systems such as tokenization will help to combat mobility payment fraud by replacing sensitive data with meaningless tokens during transactions. This protects actual card details and can also be applied to other sensitive data. New European regulations (PSD3) emphasize security and user privacy, aligning well with tokenization’s benefits. PSD3 is expected to tighten security measures further and encourage anti-fraud technologies. While tokenization enhances security, regulations like PSD3 may not definitively address liability for fraudulent token transactions. As tokenization becomes more widespread, clear guidelines for such cases will be essential. There is no doubt that tokenization is a powerful tool against fraud, but balancing security, innovation, and user rights will be essential for any robust payment ecosystem to comply with PSD3.
Mobility-as-a-Service, projected to grow by 23% by 2030, is another exciting development emphasizing the shift towards seamless, integrated solutions. Intelligent fuel management solutions are gaining traction, utilizing advanced tools to optimize efficiency. Innovative charging options based on grid capacity and electricity rates, AI-driven route optimization, and real-time fuel consumption and engine data analysis contribute to cost savings and more intelligent operations. Predictive analysis and AI algorithms empower proactive vehicle maintenance by identifying potential issues before they occur.
Embrace the Journey, Shape the Future
The fuel, fraud, and payments landscape of 2024 is intricate, woven with challenges and opportunities. By working together, fuel and mobility companies, vehicle manufacturers, and retailers can embrace these trends, address emerging threats, and develop holistic solutions that deliver seamless customer experiences. Ultimately, collaboration and innovation will be the driving forces shaping the future of this dynamic and ever-evolving industry.
Piers Horak is CEO at The ai Corporation (ai). ai is a leading provider of fleet and mobility payments, as well as fraud management solutions. Operating for over 25 years, ai has provided solutions around the world to some of the largest energy and fuel providers, financial institutions, and major payment service providers across a broad spectrum of industries. Find out more by visiting www.aicorporation.com
