The Green Sheet Online Edition
June 9, 2025 • 25:06:01
Combat digital payments fraud and shine as a nontraditional lender
Due to the nature of nontraditional lending methods, there aren’t quite as many checks as a more traditional lender would have in place. Obviously, nontraditional lending platforms still go to huge lengths to carry out the right checks, but fraud is often much more common in nontraditional lending sectors than with standard borrowing options. This is why nontraditional lenders really need to work hard to combat fraud with digital payments. I’ll explain why it is necessary.
Increased chance of repayment
For many people, nontraditional financing is often a last resort. It's an option people turn to if they need money quickly, or if typical loans have been blocked off for them. Most of the time, nontraditional loans go off without a hitch. However, this type of financing often has a lower repayment rate than standard loans (hence why the interest rate is a little bit higher).
Lenders need to do everything that they can to boost the chances that their money will be repaid. The more money repaid, the more stable the lender is. While lenders will use a variety of methods for this, combatting digital payment fraud is the big one.
This means carrying out checks on the borrower, their payment options, etc. Strong fraud prevention can include device fingerprinting, behavioral biometrics, and digital identity verification, all of which help detect synthetic identities and other scams before funds are disbursed.
If a lender can carry out the right checks, the chances of them becoming a victim of a non-repayment will go way down. This can lead to a variety of benefits for both the lender and the borrower, which I’ll explain shortly. Also bear in mind that cutting down on fraud makes the whole industry safer, and it makes it easier for people to trust a lending sector that hasn’t always garnered the best reputation.
Lower costs for the lender
Every loan that isn’t repaid is expensive for the lender. As I mentioned, the chance of a loan not being repaid is mitigated by the higher interest rates nontraditional lenders typically charge. But, even then, the company can only mitigate so much. Too much fraud can lead to lower profits, and it can put a business at risk.
Providers of nontraditional financing really shine, and have much more stable businesses, when they do all that they can to mitigate fraud against their business.
By decreasing the risk of defaults, many lenders find that they can lower their interest rates. This can pull in more customers. More customers means more profit. But keep in mind that lenders should never lose sight of the fact that they still need to be cutting back on fraud, even when their customer base rises. In fact, it becomes even more important.
More trustworthy (and more desirable) lenders
Lenders that actively work to combat fraud in digital payments appear much more trustworthy to their borrowers. This leads to a higher number of customers and a boosted reputation in the business. A number of nontraditional financing options have often been seen as somewhat disreputable, which is why companies are doing all they can to reduce fraud and make the industry more stable and reputable. This means potential partners should work only with lenders that can provide a good option for their customers.
This also means that nontraditional lenders have more options to work with other reputable companies, contributing to an enhanced positive reputation, and more business.
Nontraditional financing providers should work to combat fraud in digital payments as much as possible. This contributes to lower defaults, higher profits and more customers. Financing providers that don’t have proper checks in place rarely last in the business.
Note: The following article was a reference source for this article: trustfull.com/articles/15-types-of-common-fraud-attacks-in-digital-lending. 
Chad Otar is CEO of Lending Valley Inc. For information about the company, please visit www.lendingvalley.com. To reach Chad, send an email to chad@lendingvalley.com.
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