How payments service providers can present merchants with another line of defence against fraud

Card payment fraud has continued to rise steadily in the UK since 2011, surpassing 2008’s high-water mark in 2016 to set a new record at £618m. That rise was a 9% increase on 2015’s figure, outpacing spending on cards, which rose 6% during the same period. The result of this is that in 2016 8.3p of every £100 spent on cards was fraudulent.

Merchants are coming under increasing pressure to tackle the growing issue of card payment fraud at source, in order to stem the tide that is damaging the digitisation of retail services. The implementation of a successful prevention strategy is increasingly focused on detection of fraudulent activity at the earliest point possible in the payments ecosystem, therefore merchants should look to partner with providers who can offer robust protection and assistance in this area.

Why your PSP should be your best defence against fraud, a new white paper released this month by Paysafe, details the benefits to merchants of partnering with a PSP that shoulders much of the responsibility of fraud detection.

Fraud rules, a series of transaction parameters set by merchants, are the principle weapon in the arsenal of payments service providers to assist with the prevention of fraudulent transactions. By predetermining the activity the PSP expects to occur on the account, anomalies can be detected, and transactions will not be processed.

As the white paper reveals: “These rules are triggered when a user performs an action that possesses fraudulent traits; making an abnormally large number of transactions in a short period of time, or a transaction where the billing country and the IP country do not match, being just two examples.”

For this method of fraud detection to be successful, merchants will need to work closely with their acquirers to correctly determine the individual fraud rules that are right for their business, to determine the correct balance between accurate fraud prevention and the prevalence of false positives, which will result in declined transactions and lost revenue.

“It is therefore important for merchants to work closely with their acquirer to determine the right balance of rules for their business specifically, based on business model, transaction types, and low/medium/high risk products. A dedicated fraud and chargeback team can also give merchants comprehensive advice to develop a strategy that uses a fine balance of rules to stop fraud, whilst allowing the ‘good transactions’ to filter through,” the white paper explains.

Fraud rules will not work efficiently where merchants accept a “one size fits all” recommendation from their acquirer, the white paper concludes that partnering with a PSP that has the right range of tools to develop a tailored fraud prevention mechanism that works for individual merchants is the key to success in this area. By securing this type of relationship with a PSP, a merchant can take great strides towards reducing the growing threat of card fraud.

Why your PSP should be your best defence against fraud is available to download now.

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