Description: Transaction risk refers to the potential for loss or fraud associated with financial transactions. This risk can arise from various sources, including human error, technical failures, or fraudulent activities. In the context of payment systems, transaction risk is a critical aspect that companies must manage to protect both consumers and themselves. Transactions can be vulnerable to cyberattacks, such as phishing or unauthorized credit card use, which can result in significant losses. Additionally, transaction risk may also include the possibility of a customer disputing a charge, which can lead to chargebacks and affect the platform’s reputation. To mitigate these risks, payment systems implement various security measures, such as two-factor authentication, data encryption, and real-time transaction monitoring. Effective management of transaction risk is essential to maintain consumer trust and ensure the long-term viability of payment systems in an increasingly complex digital environment.
