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PSPs: 5 Best Practices for Enterprise-Class Fraud Prevention

posted on: Thu Feb 16 2017

Payment Service Providers (PSPs) like BlueSnap, Braintree, Chase Paymentech, GoECart, Magento, and X-Cart are offering portfolio-level fraud prevention as a baseline service to their merchants. This type of value-added offering is helping these issuers, acquirers, payment processors, payment gateways, eCommerce platforms, etc.:

  • Win new accounts and reduce churn
  • Minimize the financial and regulatory risks of onboarding and underwriting merchants

If you are a PSP exploring platform-wide fraud prevention as a strategy for overcoming the Top 7 Challenges Payment Service Providers Are Facing, it’s critical that you understand the best practices for enterprise-class fraud prevention in order to achieve maximum ROI:

  1. Sophisticated Screening and Analytics
  2. Real-Time Fraud and Risk Data
  3. Advanced AI and Machine Learning
  4. Expert Human Intelligence
  5. Portfolio Underwriting

Anti-fraud systems with enterprise-class capabilities will enable you to profitably win and retain more merchant accounts, fight rising CNP fraud rates, solidify relationships with customers, and prevent ugly surprises in the regulatory realm. All of which will help you build more positive word of mouth in the marketplace.

  1. Sophisticated Screening and Analytics. Best-in-class anti-fraud solutions employ multiple technologies that screen multiple dimensions of every transaction. This is absolutely essential for reducing fraud, boosting sales, and lowering the number of manual reviews for your merchants. Look for:
  • Analysis of multiple data elements per transaction for precise quantification of fraud risk.
  • Access to a massive network of transaction data leveraged to reveal hidden patterns.
  • Seamless integration for maximum effectiveness and efficiency.
  • Real-time analysis in milliseconds to speed transactions and enhance conversion rates.
  1. Real-Time Fraud and Risk Data. Sometimes, transaction data by itself is insufficient to precisely quantify fraud risk. Outside information sources can provide crucial context, helping correctly assess risk and reduce fraud. They should offer:
  • Integrated access to best-in-class information for more efficient, cost-effective screening.
  • The ability to orchestrate decisions that are based on your specific risk criteria, not some generic standard.
  • One integration with multiple data feeds to speed, simplify, and enhance performance.
  • Multiple and complex use cases that precisely quantify risk, minimizing false positives and lost revenue.
  1. Advanced AI and Machine Learning. Go beyond mere detection and prevention. Graduate to prediction that helps counter emerging fraud threats and first time fraud. Capabilities should include:
  • Online learning that exploits Big Data in real-time to reduce fraud in low-information scenarios like first-time fraud.
  • Offline learning that enables human fraud experts to refine and improve AI machine learning algorithms.
  • Rules integration to keep you in control, without surrendering the powerful insights of machine learning
  1. Expert Human Intelligence. Rules set by thinking human experts and merchants enable a strategic and customized response to adaptable fraudsters and rapidly-changing fraud tactics. They also make possible portfolio-wide strategies for monitoring merchant risk and regulatory compliance. Key attributes are:
  • Systems developed by fraud experts to offer an inherent advantage against human adversaries.
  • Business-oriented so risk levels can be fine-tuned to meet you and your merchant’s business objectives.
  • A platform-centric model that provides monitoring at the transaction level for individual merchants.
  1. Portfolio Underwriting. Protect your profits with continuous underwriting at the transaction level that makes frictionless onboarding fast and safe. You can not only correctly price merchant risk, but know instantly if merchants engage in behavior that could expose you to regulatory complaints or actions. Solutions should enable:
  • Rapid onboarding with short, simple merchant applications.
  • Continuous underwriting using real-time, transaction-level data.
  • Regulatory compliance that avoids ugly surprises.

As the continuing adoption of EMV drives fraudsters out of card-present fraud (card counterfeiting) and into card-not present (CNP) fraud, the sophistication and intensity of fraud attacks will only increase. Download the eBook “Protect Your Merchants. Protect Your Profits” and get valuable insight into how you can build your business by helping merchants get ahead of this rising tide.

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