Why digital identity validation and verification is now a ‘must have’ for merchant fraud orchestration, and key FAQs when considering a provider

From phishing to whaling, there’s no shortage of ways for fraudsters to steal personal data. Armed with synthetic identities, they can set up new accounts or reactivate old ones before targeting unsuspecting webstores.

This creates a massive dilemma for merchants. With so much stolen data around, it’s getting harder to tell genuine shoppers from the fakes without more clicks and checks at the checkout. But this introduces barriers for consumers who have grown used to ultra-speedy, one-click Amazon-style purchasing and can severely impact conversion.

To prevent merchants from falling down the security rabbit hole, they need multilayered technologies and services that establish digital identities in a millisecond – without adding friction.

With real-time payments set to be the next big thing for merchants, being able to instantly and accurately decide whether the customer is the real deal, or a bad actor, is now more of a priority than ever.

Fraud orchestration can validate users while boosting sales

With better access to network intelligence enabling effective profiling of data using sophisticated analytics, including behavioral, modern solutions are more able to accurately determine the digital identity of consumers in a way that doesn’t breach data protection regulations.

To do this seamlessly requires scalable and flexible fraud orchestration with the tools to establish digital identities and help build more trustworthy and secure shopper experiences.

Being confident of the buyer’s identity and monitoring metrics across the board lets merchants genuinely accept more business. In addition, it can minimize chargebacks and costs associated with false declines and manual processes to help plug leaky payment pipes that can sap profit potential.

With the right fraud orchestration approach, you can understand the digital identity of the consumer, fight fraudsters and reduce friction, while, at the same time, raise acceptance rates and generate more business without compromising security.

With budgets tightening, merchants must be sure of their investment

Many countries are struggling with high inflation, economic pressure and a downturn in consumer spending. Merchants need all the help they can get to keep acceptance rates high without incurring excessive costs.

While some providers and platforms offer out-of-the-box fraud orchestration, these can include overly complex features that they don’t need. This means merchants can end up paying over the odds for unused functionality. Many orchestration solutions simply route transactions and don’t actually do anything.

At ACI, we believe the best returns are achieved by optimizing fraud management strategies to suit individual merchants’ needs, including what’s right for their products, payment types, channels, geography and audiences. To do this, tech solutions must not only be automated and in real time but also be supported by expert analysts that look at every part of the buying journey, from discovery and sale to delivery and returns, to keep merchants secure without compromising experiences or incurring unnecessary costs. In addition, they should be benchmarked and provide guaranteed performance metrics to ensure they hit merchants’ KPIs and deliver ROI.

With so many offerings on the market, how do you choose what’s right for you?

Whether looking to make a wholesale change, take your first step or enhance an existing fraud orchestration technology, here are some key FAQs to keep you on track:

  • Can it provide access to a world-class ecosystem?
    Many heads work even better than one, and protecting payments is no exception. Look for solutions that tap into best-in-class security ecosystems. And, if you have your own systems, find ways to enhance them with partners that let you access all the latest anti-fraud and ID technology to stay ahead of the curve.
  • Will using an external solution give us better visibility?
    Performance aside, having a homegrown system can prevent you from accessing wider industry data and shared intelligence that is vital in detecting identity fraud. It can reduce effectiveness of decision engines and make it more difficult to spot important threat trends until it’s too late. Providers that use open platforms and benefit from partnerships can use historical shared network intelligence across their ecosystem to flag anything that presents a higher risk.
  • Does the potential solution offer flexibility and choice?
    This includes a creative approach to commercials with solutions that offer value-based pricing for merchants, allowing them to take as much or as little functionality as they want.
  • Is there a ‘try before you buy’ option?
    Fraud orchestration involves many moving parts, and you need to know that you’re getting one that works for you. Customer-centric providers like ACI will let you trial their digital identity and fraud solutions before you invest.
  • How does it help optimize your current anti-fraud investments?
    If you want to improve digital identity validation but already have low fraud and good acceptance rates, you may not want to jeopardize these with a rip and replace fraud solution. Choose products supported by expert payments optimization specialists who take time to discover the fixes you need to achieve more benefits and cost savings, as well as revenue to the bottom line
  • Does it offer performance figures and guarantees?
    Don’t be taken in by exciting dashboards and cool graphics – there’s no prize for having the most attractive UI if acceptance plummets or fraud rates rise. Dig deeper for performance figures and go for benchmarked solutions that offer proven results. ACI, for example, offers a performance guarantee, and according to the MRC 2023 Global Payments and Fraud Report, regularly outperforms industry benchmarks.
  • Is its machine learning (ML) smart enough?
    Fraud is fast paced and what prevents it today may not work tomorrow. Systems based on ML have helped the industry stay on top of constantly evolving threats. Yet even with ML, merchants must still refresh models, rebuild profiles, realign features and migrate models which can be time consuming, expensive and soon outdated. It’s why ACI developed its patented incremental learning solution which continuously evolves and automatically self-adjusts to ensure functionality and parameters are always up to date, in real time and with low cost to aid in optimizing conversion.
  • Is our current fraud approach giving us the best return?
    You may be happy with your current solution, but do you know how much it’s costing you? When establishing ROI, make sure to look at the cost to the business of false declines, not just the savings you get from fraud prevention.  What would a 1% improvement to revenue look like for your business?
  • We have 3D Secure; do we still need fraud orchestration?
    The reality is that if you want to minimize friction using exemptions and approvals, you must keep your fraud rates as low as possible through due diligence. While 3D is there to authenticate the consumer, it should also be used in conjunction with a fraud solution that gives the best chance of approval.

What’s next for digital ID and fraud prevention?

At ACI we’re continually looking for ways to innovate solutions. We’re currently focused on behavioral analytics and pre-checkout profiling to move fraud orchestration beyond transactions and the checkout and making the checkout process more frictionless for consumers.

This includes data points like navigational behaviors, population of forms, browsing stats, as well as specific event-based activities such as account logins and the payment methods and web tools they are using to build a bigger picture.

By basing fraud decisions on end-to-end visibility of the customer from the moment they click on the webstore, we will soon be able to see every buyer for who they really are – and that means fake ones too.

director – Merchant Fraud Product

Amanda brings more than 15 years’ experience working in fintech to her current role as product director for ACI’s Merchant Fraud solution. Since joining ACI in 2007 she has held roles across sales, strategic relationship management and product management, with a specific focus on eCommerce fraud prevention. Amanda’s specific expertise is in leveraging data to enable risk-based screening for authentication, machine learning, artificial intelligence and behavioral analytics. Amanda applies these emerging technologies to payment fraud detection and prevention strategies. She also has a particular interest in using data intelligence for aiding conversion and removing friction from payment flows, helping to create value for ACI’s customers and key stakeholders.