Criminal activity, including fraud, is ancient. But there is a type of merchant-based, online fraud relatively new to the payments industry. Known as Transaction Laundering (TL), this form of fraud is spreading quickly, often undetected by Merchant Service Providers (MSPs), including payment processors and acquiring banks. MasterCard defines TL as ‘the action whereby a merchant processes payment card transactions on behalf of another merchant.’ One example of TL is when a flower shop merchant gets approval from an MSP and then links the flower shop’s payment page to other types of businesses that it did not declare during its application process. By funneling payments through ecommerce websites, transaction launderers are able to link extended networks of unreported, hidden, and often illegal websites to MSPs’ payment networks. Read more: finextra.com
