2021. What an interesting year. With the world turned upside down by a pandemic that seemingly had its sights set on...
Fraud Management on the NonStop? There’s no better place.
You may have noticed how many payments companies have been merging over the last few years, as they struggle to maintain their acquiring fee margins. As card based transactions continue to increase, it appears that they only way to ensure long term viability is by being large. There are exceptions to this large size of course, but the large companies not only need to merge but to drive down costs by streamlining their technology.
This is not a simple exercise.
There has been years of investment into payment engines, into fraud management systems, into the front-end e-commerce portals, into card product delineation, into the issuing of virtual cards, into streamlining the on-boarding process for new merchants, QR-code management, clearing and settlement, ramping up the availability into true 24×7 processing, enriching the value of their data through AI, automation of systems using machine learning, integration with Social Media and text sentiment analysis. So with all this ecosystem of investment with a payment business, how does an acquired company go about consolidating their systems with the acquiring parent?
The NonStop world has been at the heart of card processing for over 50 years, and still boasts some of the best platform technology for processing card payments. The element of card authorization that has not got any simpler over the last few years is Fraud Management. Given how far the card authorization has to travel down the wires and across the world, and still provide an answer in a small number of milliseconds, Fraud itself is being squeezed itself to score the fraud more quickly than ever.
In fact the fraud engines have increased demands being placed on them, and they are often many hundreds of miles away from the other parts of the systems.
One answer which a growing number of users are realizing is to use the limited time budget to perform fraud management on the NonStop itself, the very same engine where the rest of the card authorization is taking place. OmniPayments has been helping its customers to achieve just this. We help enable both the core card business agencies plus the Security and Fraud departments to manage and control their own part of their business on the same platform.
This is almost starting to sound like the mainframe story, the old IBM, doing everything on one platform, but as time-budgets shrink, that’s how card processors meet their internal requirements. There are parallels in the investment banking world, where quants realized they could improve their pricing by locating their systems as close to the stock exchange as possible. For market makers trading many of the most common stocks in their billions every day, this practice continues.
Card Issuers need to keep their card fraud rates down because the Card Schemes themselves (Visa/MasterCard/Amex etc.) imposes fines on the Issuing institution if their fraud levels rise above a certain value. At the same time, Fraud events are not always the Card Issuers fault. Card rules enable the protection of the consumer; however these protections can encourage less desirable behavior.
One of the biggest categories of fraud on the rise is so called Friendly Fraud, where a consumer may claim they have not received the goods they were expecting, or claim some problem with the item received. Issuers may decide that the cost of challenging the claim exceeds the refund cost, so they let it go. Not unlike the shop-lifting rules in California whereby the police will not even investigate it unless the amount exceeds a certain threshold.
It’s more important than ever to stay on top of Fraud Management. There are good reasons why OmniPayments customers are continuing to conduct this important element of Card Processing on HPE NonStop.
For more information on how we can help you with Fraud Management, please reach out to us and don’t forget to follow us on Twitter “@omnipayments” or visit www.OmniPayments.com for further information.