This document discusses the growing problem of e-commerce fraud and introduces Fraugster's artificial intelligence solutions to help merchants minimize fraud and maximize revenue. It notes that the current fraud rate for merchants is 1.5% of total sales and that fraud patterns will shift with new PSD2 regulations in the EU. Fraugster uses machine learning to analyze data and make real-time fraud decisions within 15 milliseconds while explaining each decision. Case studies show how Fraugster helped clients like a payment solutions provider scale operations and how a fashion retailer was able to increase approvals from 89.7% to over 91% while saving on chargeback costs.
8. C O N F I D E N T I A L 8
FRAUD PATTERNS SHIFT IN THE EU
EXPECTED WITH
PSD2
9. C O N F I D E N T I A L 9
Strong Customer Authentication (SCA)
is a new European regulatory requirement
with the goal to reduce fraud and make
online payments more secure.
10. C O N F I D E N T I A L 10
Merchant
Acquirer / PSP
Card issuer
Issuing Bank
Consumer
NON PSD2
11. C O N F I D E N T I A L 11
Merchant
Acquirer / PSP
Card issuer
Issuing Bank
Consumer
NON PSD2
12. C O N F I D E N T I A L 12
Merchant
Acquirer / PSP
Card issuer
Issuing Bank
Consumer
WITH PSD2
13. C O N F I D E N T I A L 13
FRAUDSTERS WILL SWITCH TO NON-EU CARDS
GEOGRAPHICAL APPLICABILITY
EU: European Economic Area, EU-28 and Norway, Iceland & Liechtenstein
PSD2
In scope for
SCA
PSD2
Not in scope for
SCA
14. C O N F I D E N T I A L 14
RISK PROBLEM REMAINS. REVENUE PROBLEM CREATED.
PSD2
Total Fraudulent Transactions SCA required above
0.13% € 100
0.06% € 250
0.01% € 500
No SCA < € 30
15. C O N F I D E N T I A L 15
RISK PROBLEM REMAINS. REVENUE PROBLEM CREATED.
PSD2
Expected higher drop off rate for
Credit Cards and Debit Cards of
10% - 20%
16. C O N F I D E N T I A L 16
SPLIT BY VALUE
E-COMMERCE PAYMENT METHODS GERMANY
8%
13%
13%
20%
20%
26%
Digital wallet Direct debit Open invoice Credit card Other Bank transfer
E-commerce payment method split by value Source: EHI Retail Institute, EHI-Studie Online Payment 2017, 2017.
17. C O N F I D E N T I A L 17
GERMAN E-COMMERCE MARKET
▪ € 73bn market size
▪ 50% cross border
▪ Diverse payment methods with low SCA
▪ Low investment in fraud prevention vs UK and US
▪ 3% fraud rate vs 2% EU average
18. C O N F I D E N T I A LC O N F I D E N T I A L 18
HOW DO YOU PROTECT
YOUR REVENUE?
19. C O N F I D E N T I A L 19
AI IS THE ANSWER
PROTECTION
SCALABLE OPERATIONS
REVENUES
28. Entry-level
rule engine
AI risk
management suite
Chargeback
guarantee
+
Guaranteed revenue
+ Chargeback
guarantee
28C O N F I D E N T I A L
OUR PRODUCTS
FOUR PRODUCTS TO IMPROVE YOUR BUSINESS PERFORMANCE
29. C O N F I D E N T I A L 29
FULLY RE-INSURED BY
30. USE CASE: FIRE
A LT E R N AT I V E PAY M E N T M E T H O D S / PAY M E N T U P O N I N V O I C E
31. C O N F I D E N T I A L 31
CLIENT: ONLINE PAYMENT SOLUTION PROVIDER
BUSINESS OBJECTIVES
Better
Performance
Provide stronger fraud
protection for their clients,
thus increasing revenues.
Scalable Client
Growth
Simplified Internal
Operations
Provide the risk
management team with a
powerful tool for real time
testing and deployment
Serve more clients, with
limitless transaction
volume at all times
32. C O N F I D E N T I A L 32
RESULTS WITH FIRE
NICOLAS KIPP
Director Risk Management / Data Science, RatePay
“Thanks to this cooperation, our merchants enjoy greater revenue growth”
’’
34. C O N F I D E N T I A L 34
CLIENT: LEADING EUROPEAN FASHION RETAILER
BUSINESS PROBLEMS
Reduce Fraud Rate
High cost of existing
fraud solution provider
High Decline Rate
Legitimate transactions
falsely identified as
fraudulent harm revenue
and profitability
35. C O N F I D E N T I A L 35
CLIENT: LEADING EUROPEAN FASHION RETAILER
BUSINESS OBJECTIVES: FACTS & FIGURES
Annual Revenues: € 102,067,332
Fraud Solution: Retail Decision (ReD)
Cost of Fraud: € 748,645 (0.73%)
Average Approval Rate: 89.7%
37. C O N F I D E N T I A L 37
GUARANTEED CHARGEBACK PROTECTION. GUARANTEED REVENUE UPLIFT.
SWITCH TO FRAUDFREE+
FraudFree
Chargeback guarantee for
0.48% (-33%)
SAVE
€ 247,052
38. C O N F I D E N T I A L 38
AVERAGE APPROVAL RATE 89.7%
SWITCH TO FRAUDFREE+
Approval Rate
80,00%
83,75%
87,50%
91,25%
95,00%
2019-01 2019-02 2019-03 2019-04 2019-05 2019-06 2019-07 2019-08 2019-09 2019-10 2019-11 2019-12
89,06%88,99%89,07%
89,61%89,59%
89,82%89,93%89,93%90,06%90,27%90,40%
89,67%
Previous Solution
39. C O N F I D E N T I A L 39
SWITCH TO FRAUDFREE+
Approval Rate
80,00%
83,75%
87,50%
91,25%
95,00%
2019-01 2019-02 2019-03 2019-04 2019-05 2019-06 2019-07 2019-08 2019-09 2019-10 2019-11 2019-12
Fraugster Previous Solution
89,06%88,99%89,07%
89,61%89,59%
89,82%89,93%89,93%90,06%90,27%90,40%
89,67%
91,81%91,81%91,81%
91,45%91,53%
92,10%92,03%
91,75%91,93%
91,65%
92,52%
91,33%
40. C O N F I D E N T I A L 40
GUARANTEED CHARGEBACK PROTECTION. GUARANTEED REVENUE UPLIFT.
SWITCH TO FRAUDFREE+
FraudFree
Chargeback guarantee for
0.48% (33% saving)
SAVE
€ 247,052
FraudFree+
Revenue uplift guarantee
1.8%
GAIN
€ 2,431,195
Actual uplift delivered
2.4%
41. C O N F I D E N T I A L 41
MERCHANT'S NET GAIN WITH FRAUGSTER
€ 2.6m
43. C O N F I D E N T I A L 43
DEDICATED ACCOUNT MANAGER ASSIGNED TO YOU
HOW TO START
Free Analysis of your
Business: 5 days
Contract with Fraugster
2-page amendment to
PSP contract
Direct
integration
Via your
Payment Service Provider
Review with
our fraud
experts
3 – 4 WEEKS
1 click // 24H