In the early days of my career as a fraud manager, my organization’s tolerance for fraud was very low. We were hunters, my team and I. We scoured transactions and reports to identify trends and wrote rules to block bad actors. Over time, we developed an intuition around data. I could look at an IP address and know that the order was fraudulent without knowing any other attributes.
The problem is, developing a wizened eye for fraud is not something that can be taught easily or quickly. It takes time to find, hire, and train the right mix of curious and analytical individuals capable of doing this task well. Moreover, the ongoing shift in customer behavior, accelerated by the pandemic, has made any legacy, rules-based, blunt-blade hunting strategy unscalable and unsustainable.
Customers are shopping online in ever greater numbers; online sales increased 39% year-over-year in Q1 2021.1 They expect fast and frictionless payment experiences, while fraudsters are using increasingly sophisticated tactics to aggressively exploit any weakness in strategy. It’s time for a new approach: at Cybersource, we are shifting from a strategy of fraud prevention to a strategy of revenue optimization.
The what and why of revenue optimization
Revenue optimization is about more than fraud prevention. Our goal is to lead with acceptance—leveraging the simplicity of a single, end-to-end platform that includes industry-leading payment gateway capabilities, tokenization, authentication, authorization declines and retries, chargeback representment—and of course, a trusted fraud management tool that is easy to implement, simple to operate, and fully integrated with device fingerprint and third-party data services. We recommend using a flexible and scalable solution like Cybersource that doesn’t involve stitching together disparate products and managing multiple contracts.
The how of revenue optimization
A common outcome from a rules-based approach is that, in time, businesses are left with a graveyard of outdated rule logic that is difficult to measure and nearly impossible to teach or transition to new leaders and analysts. Cybersource is able to lead with acceptance because every fraud solution incorporates data from billions of global Cybersource and Visa transactions. Our proprietary AI and ML techniques add value to every transaction on day one; when coupled with custom merchant data, they provide powerful insights—even if the customer is new to you. When you know with confidence that your customers are good, it simplifies your strategy for handling bad actors and allows you to focus on optimizing revenue.
Flexibility and scalability
Of course, there are downsides to solutions that only use machine learning techniques; they tend to have difficulty responding to non-fraud related business policy scenarios as well as unfortunate errors in source data (i.e., pricing or inventory issues). With a combined approach that uses machine learning and rules, businesses can quickly adopt policy changes, reduce the impact from errors, and stop fraud attacks that may sneak past machines.
Find an ally that can be an extension of your fraud team
The days of hunting fraud are long gone; fraud professionals today are expected to understand operations, marketing, logistics, payments, disputes, and customer service—and are often the “gatekeeper” to future growth. That’s why it’s important to choose a fraud prevention partner that combines a proven technology platform with services and people who can step in, complement your internal team, and fill in the gaps whenever and however you need them to.
It's time to simplify our strategies to meet the priorities of today’s businesses: optimizing revenue, increasing customer loyalty, and stopping the bad actors that detract from these goals.
Explore Cybersource’s fraud and risk management solutions to control fraud and make way for more good business.
1 Coronavirus adds $105 billion to US ecommerce in 2020. Digital Commerce 360, June 16, 2021.