It is about moving the expectation beyond ’fraud management’ to decision precision by using accurate real-time fraud data and unique behavioural insights to spot opportunities while preventing attacks. Today, it is hard to stay ahead using advanced predictive analytics and patented AI. This technology constantly monitors payments, prevents revenue leakage, and optimises acceptance.
Knowing the difference between a good transaction and a bad transaction sounds easy, but, in truth, it’s never been harder. Ecommerce has many attack vectors with fraudsters using more complicated tactics and constant consumer preferences.
Tackling real-time threats requires real-time action and plenty of automation. This is challenging when there is no certainty of identity, consistent buying behaviours, or obvious red flags to separate fake from genuine customers. Even with extensive tools, a merchant can quickly become overwhelmed with data and rules, not knowing what actions to take to prevent fraud in real-time. The business may already use AI tools, predictive analytics, or smart routings, but may lack the understanding to apply these intelligently to optimise acceptance while detecting and minimising fraud.
Convenient returns are essential for all online businesses and a deal-breaker for customers buying unfamiliar brands or products. Free returns, convenient in-store, collection, drop off, receiptless returns, and instant refunds are key differentiators but expose merchants to friendly fraudsters and criminals. It’s also expensive with shipping and processing eating into profits. Disconnects between front and back-end processes create gaps that allow fraud to go unnoticed, so fraud solutions must reach beyond the checkout to unify insight from multiple data sources. That means consolidated intelligence and pooling different merchant information to tackle this industry-wide issue.
Our data shows synthetic identity fraud is an urgent issue. It can rack up to nine times more than the average fraudulent transaction. While data-rich analytics can automatically consolidate multiple signals and more easily determine digital identity, it also requires seamless monitoring across every touchpoint to avoid challenging genuine customers. That’s why ACI’s digital identity services, part of ACI® Fraud Management™, capture pre-authentication, transactional data, and post-authentication information.
Firstly, advanced technology and extensive data need to complement each other. To use AI effectively for real-time decision-making, you should consider all your needs, evaluate data extensibility, and orchestrate different elements at each step of the customer’s journey. Predictive modelling, if used alone, can lead to inconsistent decision-making. So, it’s best to support it with comprehensive data and collective intelligence. To address this issue, organisations are incorporating the concept of signals into their payment and decision-management strategies.
A signal is the payment’s DNA. It reflects probability and reveals the true nature of a transaction, adding a layer of precision to the decision-making process and reducing bias. Signals can be used to validate the nature of fraudulent transactions and to build consumer profiles. With the right AI tools and signal sources, fraud teams can deep-dive into advanced profiling, digital identity, and machine learning scores, and build outcome-focused reporting structures. This is also called fraud orchestration and represents an effective way to navigate the complexity of fraud while optimising acceptance and reducing the cost burden. It encourages predictability and automates model updates. In addition, it future-proofs merchant defences and empowers the actual user with the expertise of a data scientist.
Choose a multilayered fraud management solution that lets you easily orchestrate new and existing data — one that gets you to market faster via a single API integration. This will help avoid disruption and keep costs low. Try to leverage dedicated AI models that run in sync, to build stronger performance and precise customer profiles for enhanced future decision-making. Finally, work with collaborative partners, like ACI, that can help you balance the total cost of fraud management, security, and seamless conversions with intelligence decision-making and auto-optimisation to help improve precision around chargebacks, disputes, and refunds.
Fraudsters are using AI. Merchants need to fight fire with fire. AI can help merchants make sense of big data in real-time, allowing them to stop fraudsters while building better customer experiences. This creates safer returns/refunds with higher acquirer and BIN-level approval rates, without compromising consumer privacy or future compliance, confidently builds precise decision-making processes, and boosts revenue with signals.
As payment methods and verification processes evolve, AI and signals will continue to deliver the intelligence merchants need to elevate risk strategies and boost business performance. It can also pave the way to deeper customer understanding and ultimately hyper-personalisation.
This editorial piece was first published in The Paypers' Fraud Prevention in Ecommerce Report 2024-2025, the ultimate source of knowledge that taps into the ever-evolving fraud realm and helps ecommerce specialists protect their businesses with the latest fraud prevention strategies.
Erika is a certified fraud and analytics professional with over 20 years of experience in payment acceptance optimisation, global fraud prevention, digital identity verification and authentication, statistical data analysis, ML, and AI enterprise real-time financial decision technology solutions. She leads a global team of fraud professionals overseeing customer analysis and implementing intelligent solutions to reduce operational costs and generate incremental revenue. Erika’s contributions have been recognised with the ‘Forty under 40’ and Women in Payments Educator in 2019.
ACI Worldwide is a global leader in mission-critical, real-time payments software. Our proven, secure, and scalable software solutions enable leading corporations, fintechs, and financial disruptors to process and manage digital payments, power omni-commerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with a local presence to drive the real-time digital transformation of payments and commerce.
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