Fraud Challenges for
International Expansion
Generating LIFT
Chris Harper
Senior Director, Sales, ReD
Generating LIFT
 Local Knowledge
 Intelligence
 Flexibility
 Tailoring
Local Knowledge
What’s different about cross-border fraud detection?
 Differing status of EMV implementation
 Weaker authentication and ...
Chip and PIN rolled out in 2004 -
0
50
100
150
200
250
300
350
2004 2005 2006 2007 2008 2009 2010 2011
Phone, internet and...
Fraud heat map of Los Angeles Online transactions with cards issued in France
What’s different about cross-border fraud de...
Intelligence
Profiling your customer
Card number
Amount
Purchase velocities
Billing / shipping details
Email
CV2 AVS
Shopper history
Gl...
 Merchant Confirmed Frauds and Blacklisting
 Issuer, Scheme and Chargeback Files
 Country – Specific Industry Hot Card ...
Merchant Type: # Hits : Value: Avg Txn Value:
European Retail Merchants 5870 £651,348 £110.96
Virtual Goods Merchants 1476...
Cross-industry information sharing - everyone benefits
• Issuers and Acquirers get early warning of compromised or fraudul...
Flexibility
Protection with and without 3D Secure
 Implementation varies by country
- mandated in some countries, with fines for non-...
Tailoring
Tailoring fraud strategies and rules - by country
Online transactions with cards issued in France
IP City Attempted Fraud ...
Tailoring fraud strategies by channel and
payment types
Web
• Domestic markets are maturing - customer experience is the p...
You can monetize cross-border opportunities safely
by
 Obtaining Local Knowledge
 Gaining access to global fraud Intelli...
A World of
Opportunity
- with a little LIFT !
Chris Harper
charper@redworldwide.com
CNP EXPO ReD on Fraud Challenges for International Expansion
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CNP EXPO ReD on Fraud Challenges for International Expansion

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Chris Harper, Retail Decisions, explored the fraud prevention challenges for online merchants seeking to take advantage of growth opportunities in new markets. He discussed the importance of understanding the different fraud profiles of target countries and differing consumer attitudes towards online security and alternative payment channels.
He provided practical examples of these differences and their implications for risk and fraud prevention.
Examples also illustrated the importance of access to global fraud intelligence and flexible fraud strategies that can be adapted quickly to changing circumstances, as merchants learn more about the countries into which they are expanding. Topics such as tailoring fraud strategies and rules by country, channel or payment types were also covered.

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  • Understanding the customer journey is key and profiling them is crucial to building up this picture. Where do they shop, how do they shop etc….have they shopped with you in store or online before? Mobile / agile customer
  • So, where does our intelligence come from? ReD brings together information on suspicious or fraudulent transactions from around the globe. We have multiple sources of information, including merchants, issuers and acquirers, card schemes and industry hot card files. The RFX service makes this information available in real-time to merchants, through the RFX Club.
  • ($0.60=£1).
  • So hopefully this presentation hasnt put you off! Yes the risks are higher and yes it’s a daunting place to go. However, its not all doom and gloom – there IS a significant opp which you can sagfelyadv of using the principles we have talked about:- using your data- Tailoring your rulesContinuous reporting and monitoring If you do all of this then you can be confident when accepting payments on US cards.Thank you for your time. Does anyone have any questions…….
  • CNP EXPO ReD on Fraud Challenges for International Expansion

    1. 1. Fraud Challenges for International Expansion Generating LIFT Chris Harper Senior Director, Sales, ReD
    2. 2. Generating LIFT  Local Knowledge  Intelligence  Flexibility  Tailoring
    3. 3. Local Knowledge
    4. 4. What’s different about cross-border fraud detection?  Differing status of EMV implementation  Weaker authentication and verification services in many countries  Differing consumer attitudes to online security  Cultural and language barriers
    5. 5. Chip and PIN rolled out in 2004 - 0 50 100 150 200 250 300 350 2004 2005 2006 2007 2008 2009 2010 2011 Phone, internet and mail order fraud (Card- not-present fraud) Counterfeit (skimmed/cloned) fraud Fraud on lost or stolen cards Card ID theft Mail non-receipt The UK experience post EMV implementation - movement of fraud to CNP channels 100% compliance achieved by February 2006
    6. 6. Fraud heat map of Los Angeles Online transactions with cards issued in France What’s different about cross-border fraud detection?  You probably don’t know the delivery hotspots and local fraudster MOs IP City Attempted Fraud Rate % Volume % Attempted Fraud Paris 1.7% 18.0% 17.3% Marseille 3.1% 2.9% 5.1% Lyon 2.4% 3.4% 4.7% Caen 3.8% 1.9% 4.0% Rennes 2.1% 3.1% 3.8% Orleans 2.7% 2.0% 3.2% Lille 1.8% 3.0% 3.1% Toulouse 1.9% 2.8% 3.0% Nantes 1.7% 2.6% 2.5% Bezons 1.8% 2.2% 2.3% Bordeaux 1.7% 2.3% 2.1% Others 1.6% 55.7% 48.9% Total 1.8% 100.0% 100.0%
    7. 7. Intelligence
    8. 8. Profiling your customer Card number Amount Purchase velocities Billing / shipping details Email CV2 AVS Shopper history Global negative lists / merchant specific positive lists Marketing/loyalty programmes Product / delivery / customer details Payment details / 3DS responses
    9. 9.  Merchant Confirmed Frauds and Blacklisting  Issuer, Scheme and Chargeback Files  Country – Specific Industry Hot Card Files  Stolen Personally Identifiable Information sold within Online Forums Other sources of fraud intelligence Remember OFAC compliance …. Access to global intelligence supports entry to new verticals / countries and enables faster adjustment of rule strategies
    10. 10. Merchant Type: # Hits : Value: Avg Txn Value: European Retail Merchants 5870 £651,348 £110.96 Virtual Goods Merchants 1476 £60,880 £41.24 Global Travel Merchants 14616 £1,169,808 £80.03 Latin American Merchants 2906 £170,684 £58.73 Other Merchants 3458 £37,607 £10.88 EU Payment Service Providers 34483 £1,890,889 £54.83 Telecommunication Merchants 13399 £200,167 £14.94 US Retail Merchants 91562 £5,795,978 £63.30 Hits against ReD’s Global Negative Database in a 6 week period Never under-estimate the value of data
    11. 11. Cross-industry information sharing - everyone benefits • Issuers and Acquirers get early warning of compromised or fraudulent merchants • Issuers can proactively alert Cardholders, improving customer experience • Merchants benefit from faster fraud detection and reduced chargebacks • Acquirers and PSPs can provide added value to merchants • Together, we achieve a safer payments ecosystem
    12. 12. Flexibility
    13. 13. Protection with and without 3D Secure  Implementation varies by country - mandated in some countries, with fines for non-compliance  Consumer attitudes also vary - 3DS generates cart abandonment in US and Germany; sales uplift in UK and Russia  Post-verification fraud screening can provide additional authentication support - and enable genuine sales declined by 3DS
    14. 14. Tailoring
    15. 15. Tailoring fraud strategies and rules - by country Online transactions with cards issued in France IP City Attempted Fraud Rate % Volume % Attempted Fraud Paris 1.7% 18.0% 17.3% Marseille 3.1% 2.9% 5.1% Lyon 2.4% 3.4% 4.7% Caen 3.8% 1.9% 4.0% Rennes 2.1% 3.1% 3.8% Orleans 2.7% 2.0% 3.2% Lille 1.8% 3.0% 3.1% Toulouse 1.9% 2.8% 3.0% Nantes 1.7% 2.6% 2.5% Bezons 1.8% 2.2% 2.3% Bordeaux 1.7% 2.3% 2.1% Others 1.6% 55.7% 48.9% Total 1.8% 100.0% 100.0% Online transactions with cards issued in Belgium Billing Country Attempted Fraud Rate % Volume % Attempted Fraud Belgium 0.3% 95.0% 57.6% France 3.0% 1.2% 8.8% Netherlands 2.5% 0.9% 5.6% South Africa 33.3% 0.0% 3.2% Spain 32.4% 0.0% 3.2% Australia 75.0% 0.0% 3.2% Norway 43.5% 0.0% 2.7% New Zealand 50.0% 0.0% 2.7% Switzerland 10.9% 0.1% 1.9% Ecuador 75.0% 0.0% 1.6% Denmark 9.5% 0.0% 1.1% United Kingdom 0.4% 1.1% 1.1% Other 2.1% 1.5% 7.5% Total 0.4% 100.0% 100.0%
    16. 16. Tailoring fraud strategies by channel and payment types Web • Domestic markets are maturing - customer experience is the priority • Higher risks in less mature International markets Mobile • Shift of fraud to mobile channel - volumes small but demands greater scrutiny Call Center • Migration to this channel of fraudsters avoiding 3D Secure elsewhere • Internal fraud/collusion
    17. 17. You can monetize cross-border opportunities safely by  Obtaining Local Knowledge  Gaining access to global fraud Intelligence  Achieving the Flexibility to trade effectively across cross-borders  Tailoring rules, by country, channel and payment type 18 Don’t block cross-border revenue opportunities – make it safe to accept these transactions, and grow your business
    18. 18. A World of Opportunity - with a little LIFT ! Chris Harper charper@redworldwide.com
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