5 Questions to Ask When Choosing a Fraud Solution
The good news is that an effective fraud-protection strategy, coupled with the right partner and technology, doesn't just help detect and prevent fraudulent activity. It could also help increase conversions, reduce operational costs, and improve customer lifetime value – all of which could mean revenue growth. But not all fraud solutions are created equal. Enterprise-level businesses need a strategy that can handle high transaction volumes without increasing costly false positives.
With so many fraud-protection options available, each with different capabilities, how do you choose the one that works best for your business? Start by asking any potential partner these five questions.
1. Does the solution leverage a wide variety of data?
Data is powerful: Insights-driven businesses grow at an average rate of more than 30% annually.3 Enterprises need a program that’s tailored to their specific needs, yet also adapts to evolving fraud patterns. The more data points it can pull from, the better it can help. The top solutions harness a rich data set across web and mobile, collected from both internal and external sources. In addition, fraud solutions should have effective collection, integration, and analysis processes to ensure data is used in the most efficient way.
PayPal Commerce Platform for Enterprise leverages massive and diverse datasets that combine pre-defined data elements with internal feeds and third-party sources. Our fraud solution helps analyse multiple browser, mobile, desktop, and network attributes. It uses fuzzy matching algorithms and cluster analysis to create a unique fingerprint for every device. Enterprises can aggregate all that data to help validate user identity, accelerate response times, and make data-driven decisions. It’s all the power of Big Data, customised for enterprise organizations.
2. Will it scale & adapt to a changing fraud environment?
Criminals are becoming more sophisticated and updating their tactics to outsmart merchants. Traditional fraud solutions use inflexible data warehousing and require analysts to modify the rules – and they won’t be able to keep up. Enterprise organisations need a scalable platform that can easily adapt to evolving fraud patterns without causing friction at checkout or increasing the risk of false declines.
With PayPal Commerce Platform for Enterprise, data warehouses are out – and flexible data lakes are in. Eliminating the data hierarchy and storing data in a flat architecture means businesses can choose only relevant data sources and quickly create new data feeds. Our technology is designed to grow organically and help enterprises scale horizontally without costly resource investment. Not every fraud solution can say that.
3. Does it leverage machine learning to proactively detect fraud patterns?
Legacy solutions could leave enterprises vulnerable to emerging fraud patterns. Outdated intelligence, low-quality data, and ineffective alerts create weak points that fraudsters are more than happy to exploit. But the best fraud solutions allow enterprises to respond using machine learning and advanced analytics. These solutions automatically evolve based on the latest events and data, continuously helping to enhance fraud detection.
PayPal for Enterprise’s advanced machine learning can continuously test rule performance and help create suggestions for new rules and thresholds based on historical data. And we help businesses understand why decisions were made so they can adjust the decisioning process to fit unique needs and risk tolerances. These are the technologies that could help give enterprise merchants the edge in the fight against fraud.
4. Can it make real-time decisions?
Fraud solutions must strike a fine balance between preventing fraudulent transactions and ensuring legitimate transactions are approved. Increasingly strict rules can mean more false positives: One study estimates that false positives account for one-third of declined transactions.4 Enterprises need a platform that combines real-time decision making with a rich historical data set – and helps to prevent the cart abandonment and lost revenue that can accompany false positives.
PayPal for Enterprise uses a dynamic approach to authentication that can help businesses provide seamless customer experience while reducing risk of fraud. Our tools allow fraud teams to analyse attributes like device fingerprinting and suspicious behavioural signals and help them put it all together with data linking to connect users to transactions in real-time. Businesses could head off bad actors and reduce payment challenges for legitimate customers.
5. Can it help improve operational efficiency?
With fraud continuing to rise, analysts need intuitive tools to improve efficiency and productivity. However, many enterprise merchants still rely on manual or semi-manual systems to facilitate their fraud prevention efforts. This increases the cost of their operations and makes it hard to scale initiatives as the enterprise grows. The right fraud prevention tool will use automated processes and customized workflows to help you reduce manual reviews, reallocate resources, and streamline operations.
With PayPal Commerce Platform for Enterprise, analysing large and complex datasets doesn’t have to mean large investments of resources. Our tools help businesses simplify back-office operations and automate time-consuming tasks. Dynamic, high-level intelligence provided at a glance assists in decision-making and helps identify connections between data points – so enterprises can more quickly uncover patterns that could be indicative of fraud. An intuitive user interface and the ability to choose the programming language helps reduce the resources needed for training. Combined with a detailed fraud strategy that involves reviewing each transaction, our tools can help enterprises keep up with evolving fraud.
Helping to prevent fraud today, tomorrow, and into the future
Understanding what separates good fraud solutions from great ones is critical to enterprise-level organizations. Asking these five questions may save large companies millions of dollars in direct fraud costs, lost revenue, and wasted resources – and could enable them to make faster, more effective decisions that enhance the customer experience.
With one of the largest global payments datasets in the world, PayPal for Enterprise can help companies fight fraud and make more strategic decisions about risk. Our fast-learning, predictive risk algorithm can be tailored to specific payments infrastructures, helping to increase authorization rates while reducing false positives and manual review. Learn how PayPal for Enterprise can help you protect your enterprise against fraud.
Sources:
1 True Cost of Fraud Study, LexisNexis, published 2019.
2 Card Fraud Losses Reach $27.85 Billion, Nilson Report, published November 2019.
3 Insights-Driven Businesses Set the Pace for Global Growth, Forrester, October 2018.
4 False Positives: The Unintended Consequences of Mitigating Card-Not-Present Fraud, Fidelity National Information Services, October 2018.
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