Retail Systems: New Thinking31-Jul-2014
The retail sector has, whisper it, emerged victorious in the fight against CNP fraud. Glynn Davis looks at the key factors behind this….
In 2003 when e-commerce sales were still pretty much in their infancy, the levels of fraud from card not present (CNP) transactions were forecast to hit stratospheric heights as fraudsters shifted their attention from in-store crime and instead focused their efforts online. While there has been a near three-fold increase between 2003 and 2013 in CNP fraud – from 122 million to 300 million – the level of online commerce has grown much more markedly, which to Mark McMurtrie, director at Payments Consultancy, is further proof that the 'battle has been won' by retailers against the fraudsters.
" It is under control and attacks are going to different places. Attention has shifted to internet banking and although it is still a priority for fraudsters to steal card members, they are now doing it through [major] data breaches rather than from individuals and retailers," he says.
This trend comes against a backdrop of a change in thinking by retailers. McMurtrie says they have sought ways to accept transactions (rather than automatically decline them) as they had done previously when they judged them to be of high risk. There has also been a focus on international sales as a serious driver of growth so accepting overseas transactions is a major part of doing business today for many merchants whereas previously they would have simply rejected all such purchases…
Don Bush, vice president of marketing at Kount, agrees that there is a lot more data that can be utilized: "We've got geo-location, device finger printing and links to any previous bad behaviour that might have been committed. There is a lot more data we can tap into If you go online then I know a lot more about you than if you were in-store. I can tell with very good certainty if a transaction is valid.
The latest generation of Kount solutions consist of a platform with a layered approach that incorporates lots of techniques and features whereby Bush says fraudsters have to go through a lot of hoops before a transaction can be successfully accepted. But such is the nature of the solution that he says it can make an accept/decline decision – based on a retailer's assigned risk tolerances – in a mere 300 milliseconds…
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