Stop Merchant Fraud Before It Starts

Merchant fraud is a growing challenge across the European financial landscape. As the complexity of digital commerce increases, so too does the sophistication of fraudsters. From fraudulent merchant applications to credit fraud and transaction laundering, the impact on banks, acquirers and payment service providers can be severe.  

Zoot helps organisations across Europe tackle merchant fraud head-on with configurable fraud detection software and fraud prevention software that deliver real-time protection, automation and control.  

Merchant fraud refers to deceptive or illicit activities carried out by merchants (or individuals posing as merchants) to exploit financial systems for gain. This includes both first-party and third-party fraud, from shell companies set up purely to launder money, to merchants misrepresenting their products or financials.  

At its core, merchant fraud thrives on poor vetting, slow onboarding systems and limited fraud visibility. That’s where effective fraud detection and prevention becomes critical. 

Merchant fraud often results in: 

• Chargebacks and financial losses  

• Regulatory penalties (especially under PSD2, AMLD, and GDPR frameworks) 

• Reputational harm to banks and payment providers 

• Operational inefficiencies, as fraud teams scramble to respond manually  

Unchecked, even a single fraudulent merchant can compromise trust and profitability across your portfolio.  

Understanding the most common forms of merchant fraud helps risk teams prepare more effectively.  

Application Fraud  

Fraudsters use fake identities, stolen data or shell companies to gain approval. Without strong controls, these merchants slip through the onboarding process undetected.  

Transaction Laundering  

A legitimate-looking merchant secretly processes payments for unauthorised third parties. Often difficult to spot without continuous monitoring.  

Credit Fraud  

Merchants misrepresent their financials or intent, resulting in unpaid debts or insolvency. Fast, automated credit fraud prevention is essential here.  

Bust-Out Fraud  

A merchant builds up a history of clean transactions, then disappears after a series of high-value fraudulent ones. These are premeditated and highly damaging.  

To combat these threats effectively, financial institutions need a proactive, data-driven and automated approach. 

Key capabilities include:  

• Real-time application screening using internal and external data  

• Configurable fraud rules engine to flag suspicious behaviour instantly  

• Automated workflows that escalate risk without slowing down approvals  

• Continuous monitoring to detect behavioural changes post-onboarding  

• Audit-ready reporting for regulatory compliance  

Zoot equips fraud and risk teams with the tools to move fast without losing control. Our fraud detection and prevention platform gives you: 

• A powerful fraud rules engine for rapid decisioning  

• Seamless integration of third-party data to enrich risk profiles  

• No-code configuration so business users can adapt rules instantly  

• High-volume processing with full transparency and auditability  

Whether you’re onboarding new merchants or managing credit risk, our fraud prevention software supports faster, more confident decision-making.  

Merchant fraud is not only a compliance risk. It’s a revenue threat. For banks, acquirers and PSPs operating in Europe, investing in smart, adaptable fraud prevention tools is no longer optional.  

Zoot’s platform provides exactly that: real-time, intelligent protection against application fraud, credit fraud and transaction laundering. All with the flexibility and speed today’s teams need.