We've identified six reasons why a data-driven approach to fraud management decision-making is more important than ever before.
1. Data-driven decisions help you capitalise on change and new opportunities
Data helps you understand changing consumer trends and whether they're fleeting or here to stay. Data could identify which areas of your business have suffered a slump or experienced growth. With the right data — from a fraud screening tool like Cybersource Decision Manager — you can focus your resources on the parts of your business that offer the best potential for maximising sales.
If you do business in the EEA or UK, you'll likely need to comply with the PSD2 Strong Customer Authentication (SCA) mandate this year. Through data, you decide on the importance to your business of an SCA exemption strategy by enabling assessment of the proportion of transactions potentially eligible for exemption. If it's high, an SCA exemption strategy could be a win for your business as you make frictionless checkout a competitive differentiator.
2. Data-driven decisions reinforce the power of identity
Increasingly fraudsters go after identity information, rather than credit card details, exposed by data breaches and phishing scams. So we're seeing more identity-related frauds like identity theft and synthetic identities.
Merchants should consider using additional data points to create more accurate customer identities. The more data you have, the more easily you can detect fraudulent identities. And the more you know about a genuine customer, the more confidently you can recognise them and provide a smoother shopping journey.
You can go further with Decision Manager's Identity Behaviour Analysis feature. It uses multiple data points from our global database to create an identity for each consumer, which it then tokenizes. When the consumer places an order — whether as a first-time or returning customer — the tokenized identity is flagged in Decision Manager so that the merchant can safely accept the order.
3. Data-driven decisions are objective
It's fair to say that most of us have unconscious biases when making decisions about fraud prevention. Past experience can colour your appetite for risk and your perception of potential threats, making you inflexible or over zealous in your fraud prevention strategy. So you may continue to associate a particular postcode with a high fraud rate, without realising things have changed since the pandemic. Or you may block a whole country from your international expansion strategy on the grounds it was risky in the past.
In both scenarios, your preconceptions could hamper your business. But if you work with a fraud solution provider like Cybersource, you'll have access to up-to-date, impartial data. That, coupled with our extensive global expertise, can help you make the right decisions for your business, and accept more good orders while protecting against fraud.
4. Data-driven decisions can be based on multiple sources
Most merchants who rely solely on their own data to make decisions will have a narrow view of fraud. Many will understand the value of using more data from additional sources, yet struggle with the development work required to connect to more than one vendor.
In contrast, customers using Decision Manager benefit from insights delivered by data from more than 141 billion transactions¹ (through VisaNet and Cybersource). Additionally, a connection to Decision Manager lets you integrate data from many third-party vendors — efficiently and at lower operational cost — to:
provide a more holistic view of fraud;
enable more accurate decisions based on the largest amount of data available;
help you implement a robust fraud management strategy.
5. Data-driven decisions lay foundations for ML and modelling
We believe that models and machine learning (ML) strategies are only as capable as the data they have to work with. There are some great models on the market, but you need to be sure they have access to enough data to do a good job of automating fraud decision-making.
Consortium data enables a global view of fraud. You may also want the flexibility to drive decisions based on data for a particular region, industry or channel. Clearly, the more finely you segment the data, the less there is to draw on. Hence it makes sense to choose a provider like Cybersource, with very high data volumes, so that data integrity is maintained no matter how you segment.
6. Data-driven decisions empower review teams
If your fraud prevention strategy includes a review team, using more data can help enhance performance for almost everyone of their KPIs, by enabling:
shorter decision-making time;
faster identification of emerging fraud trends;
reduced review rates through increased automation;
reduced customer friction;
reduced customer insult rate;
lower operational overheads.
Learn more about Cybersource Decision Manager and the power of data-driven decision-making for fraud management strategies.
These materials and best practice recommendations are provided for informational purposes only and should not be relied upon for marketing, legal, regulatory or other advice.
Recommended marketing materials should be independently evaluated in light of your specific business needs and any applicable laws and regulations. Cybersource is not responsible for your use of the marketing materials, best practice recommendations, or other information, including errors of any kind, contained in this document.
1VisaNet transaction volume based on 2020 fiscal year. Domestically routed transactions may not hit VisaNet.
About Mark Strachan
Mark is the business owner for the EMEA Managed Risk portfolio at Cybersource and a fraud risk professional with over 12 years experience in the card payment and banking industry. His current role as EMEA Managed Risk Principal at Cybersource allows him to work closely with enterprise clients on strategies to reduce risk associated with fraudulent activity and optimise revenue.
About Cybersource
Cybersource helped kick start the ecommerce revolution in 1994 and haven’t looked back since. Through global reach, modern capabilities, and commerce insights, we create flexible, creative commerce solutions for everyday life – experiences that delight customers and spur growth globally. All through the ease and simplicity of one digital platform to manage all payment types, fraud strategies, and more. Knowing we are part of Visa and their security obsessed standards, you can trust that business is well taken care of – wherever it may go.
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