How to help prevent payment fraud at your business
It’s no secret that payment fraud is a major problem for financial institutions. Payments fraud has increased by 70 percent in the U.S. since 2004, and nearly half of consumers have experienced some sort of card fraud.
Fraud hurts consumers and merchants alike, but cardholders put an even greater level of trust in their financial institution to protect them and resolve any negative consequences associated with fraud. In fact, an Accenture survey reports that 74 percent of respondents expect financial institutions to protect them from fraud. The impact of fraud on financial institutions goes far beyond the concrete dollars and cents and into the even more nebulous and sensitive area of consumer trust.
Fighting fraud requires fraud managers to have as much information as possible in order to aggressively identify fraud and take steps to mitigate it. Turning that information into a solid fraud prevention strategy requires discipline in three categories: processes, technology and human expertise. A good payment processing partner can be invaluable in providing this information and helping your financial institution perfect a fraud mitigation strategy.
Solid Fraud Mitigation Processes
Making sure your fraud strategies include streamlined and highly effective processes is the first step toward achieving reliable fraud mitigation. These processes should include at a minimum, full lifecycle chargeback processing services, management of signature debit disputes, dispute collection from cardholders, and automated reporting of confirmed fraud to the card networks. Outsourcing some or all of these functions to a payments provider can increase efficiency and decrease operational costs while leaving your internal staff free to attend to other parts of the process.
Advanced Data and Technology Resources
The payment technology solutions available today for preventing fraud are impressive. A combination of automated systems and big data aggregators is making fraud mitigation more aggressive than ever. With the right credit card processing partner, you should be able to employ adaptive fraud detection models that learn cardholder purchasing behaviors and identify abnormal card usage. With this information, a negative fraud score can stop fraud at the point of sale while still achieving a high approval rate on non-fraudulent transactions. As large and technologically advanced as the card brands are, they don’t always catch and report every compromise. A service like Vantiv’s generated card compromise alerts, VNTV Alerts, proactively sends fraud notifications to financial institutions that Visa and MasterCard may have missed. With seven pre-defined reports to monitor fraud activity, Vantiv’s fraud tools capture data irregularities and adapt to changing consumer behavior over time to better anticipate and detect fraud.
Human Fraud Expertise
While a solid fraud mitigation strategy is largely automated and technology driven, there’s no doubt that the people behind the processes bring a sizable advantage to any strategy. Having a fraud expert in between the software and a decision alert limits the number of alerts to cardholders while increasing the fraud detection ratio. Vantiv employs a large team of fraud experts and provides access to a fraud consulting help desk to assist financial institutions with fraud-related questions and research endeavors. The personal human touch is the glue that holds the data, technology, and processes together for exceptional fraud mitigation results.
Outsourcing your fraud needs, even partially can give your institution the boost it needs to protect your revenue and your reputation with your cardholders. Check with your payment processor to learn more about their fraud solutions. Or contact Vantiv for more information on our best-in-class OmniShield fraud protection suite.