When intermediaries fail to guarantee 100% trust, there is room for payment fraud. The ways in which businesses are exposed to payment fraud depend on arbitrage. Below we define the arbitrage process.
Arbitrage is the process of buying a product or service on a first market, and
reselling it on a second market at a greater price.
A necessary condition for a commercial transaction to be profitable is the
existence of an arbitrage opportunity. However, the same holds for frauds,
where an arbitrage opportunity is also necessary for frauds to occur.
With payment fraud, the opportunity is to buy products or services with a
stolen payment card, or with card informations bought on the blackmarket but at
a reduced cost. In turn, the greater the arbitrage opportunity, the higher the
exposure to payment fraud– in a later, we will define more precisely the term