The last survey conducted by cardnotpresent.com in collaboration with Payvision that polled acquirers, MSPs, ISOs, PSPs and online merchants about the challenges in the CNP arena, showed an extremely interesting finding for companies in the fraud protection industry. The resulting report states that “nearly 23% of the merchants surveyed are not satisfied with the ways in which their PSP/ISO mitigates fraud losses, especially in the cross-border sales” (page 13). With cross-border sales increasing, it can be concluded that fraud cases associated with these sales will be on the rise. It is therefore important to prevent the aforementioned percentage from growing by analyzing the reasons why merchants are not satisfied with the way their providers are managing the challenge presented by fraud. Based on the knowledge of the fraud industry and the analysis of the different fraud protection providers, we have detected three areas that, when neglected, can increase dissatisfaction amongst merchants.
1. General templates vs. System Customization
Most of the fraud protection solutions available in the market tend to use global or industry templates that they implement in all merchants. Since these templates tend to overlook a merchant’s unique needs, the fraud protection given is not comprehensive and/or does not address the merchant’s needs properly. False positive orders are common with these systems, so merchants do experience a drop in the fraudulent transactions, but at the same time they realize the number of rejected orders has increased. We recommend sharing with your provider as much information as possible about the nature of your business, the type of products/services you offer, the fraud cases that you have undergone so far and the payment methods you would like to use. The provider should be able to understand your business and your objectives, and thus adapt its fraud detection tools accordingly.
2. The More Verification Tools, the Merrier
Some solutions use a limited number of verification tools to perform the screening of incoming transactions, which reduces the number of attributes that can be verified. Unfortunately, fraudsters’ algorithms are designed to test the different verification tools until they find the loophole that will allow them to break through the system and place endless fraudulent orders that are undetected. The higher the number of verification tools, the more exposure that fraud protection providers gain to these attacks –and the means to effectively detect them. This enlarged experience in detecting fraud enables them to verify significantly higher transaction volumes, and the accrued expertise can work on merchant’s favor. Some popular verification tools might require merchants to disclose sensitive information. Providers must be open to communicate the benefits and the performance of the new tests in order to win the trust required to share important data that will improve verification.
3. Zero Fraud Does Not Mean Business Growth
Some providers share a common approach to reduce fraud, and that is tuning their fraud protection systems to alert on any suspicious behavior and reduce fraud by only detecting threats or the negative attributes of a transaction. In an attempt to preserve a reputation for safety and keep fraud rates low, these providers fail to look at the positive attributes of a transaction. Yet, weighing the negative attributes, or threats, against the positive attributes is essential to detect fraud effectively and only filter out those orders that are fraudulent, while ensuring the maximum number of genuine customers is approved. Ensure your fraud protection provider helps you achieve real growth by increasing the number of accepted genuine orders, instead of merely reducing fraud by piling up rejected orders on the wrong basis.
1 Key Business Drivers & Opportunities in Cross-Border eCommerce. International Expansion into Emerging Markets, by Shanty Elena van de Sande, Payvision BV