Sift recently exhibited and presented at MRC Berlin 2022, the leading conference for payments and fraud prevention professionals to meet, broaden their networks, and share ideas with industry peers. Brittany Allen, Trust and Safety Architect at Sift, led two sessions: a Fraud 201 workshop with Identiq and Wix, and Fraud Prevention KPI’s: Metrics that Matter & Reporting to the Board with McDonald’s. Discover insights from these presentations and the Sift team’s top takeaways from MRC Berlin 2022 below.
Fraud prevention KPIs that matter
Allen’s session alongside McDonald’s Christine Gillot covered fraud prevention key performance indicators (KPIs), including benchmarking performance, customizing for the board, and brainstorming improvements. With so many different techniques to measure the effectiveness of teams and identify gaps in strategy, the measurement process can be challenging for many fraud managers—especially when factoring in which assessments will resonate best with executive and board audiences.
Measuring a fraud team’s performance is imperative to have the resources needed to accurately defend against the ever-evolving Fraud Economy, which means managers must ensure they’re using the correct metrics to convey their department’s performance. To get the most accurate assessment, it’s important to track KPIs in various focus areas, including transaction events, account activity, content updates, false positives, forecasting chargebacks, and vendor ROI. Allen also suggests merchants track performance and benchmark against industry standards, keep data simple and honest, and always seek ways to improve.
PSP-issuer-merchant collaboration under PSD2
PSD2 is introducing important changes in the fight against online payment fraud, and the decision to trigger strong authentication (previously made by merchants) is now in the hands of the customers’ issuing banks. This step adds friction to the customer journey, and therefore increases the risk of transactions failing. Payment platform Dalenys has found that strong customer authentication (SCA) isn’t enough to prevent synthetic fraud and friendly fraud. They are seeing more of these scams, making fraud prevention much more complex. Dalenys’ research also shows that up to 5% of authenticated payments are scams on the issuer side, such as through social engineering to get victims to share the SMS auth code. Data sharing between all parties in the payment ecosystem is crucial to ensure the best collaboration and maximize conversion rates. Businesses under PSD2 must minimize disruption to their business and ensure frictionless experiences when possible with a flexible PSD2 solution.
The future of online shopping
Speakers from Allyiz, JP Morgan, Inditex, and Sony discussed the future of online shopping, including business shifts to e-commerce and marketplaces, trends in alternative payment methods, and adapting to new customer expectations. Building customer loyalty across channels will be crucial for many brands, with end-user experiences like curbside pick-up, buy now pay later (BNPL), and loyalty programs becoming the expected norm. However, recent recession fears are impacting debit card traffic, which is skewed towards younger customers who now leverage BNPL. Those customers are starting to tighten their discretionary spending, which could have a ripple effect on merchants and the greater economy.
Leverage data to reduce disputes
Fraudsters are using advanced technologies to defraud merchants by abusing the dispute and chargeback process. Speakers discussed what data sellers can leverage to combat first-party fraud, new strategies the card brands are working on to help the seller community, and how this could bring overall benefits to the payment ecosystem. The total cost of a dispute rose in 2021, which could have a significant impact on operational budgets. Visa also reported that <1% of transactions receive chargebacks and only one-third are represented by merchants, indicating that many businesses are leaving money on the table. To effectively lower chargeback rates and recoup more revenue, merchants need a proactive end-to-end fraud solution.
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