Insights Magazine from CMSPI
Page 9 | November 2021
Sub-optimal fraud rules at the pre-authorization stage can generate excessive declines if suppliers later in the chain, such as the processor or issuer, are not aware that screening has already taken place.
CHECKOUT
When connecting with a gateway, each processor requires data in a specific format – which can present an array of challenges. In one case, CMSPI found an international merchant was seeing all transactions above a certain value declined in one country – the result of a payment service provider that was unable to support the necessary number of digits for the local currency.
GATEWAY
Transparency is a major issue when it comes to processor declines. Processors don’t have visibility outside of their transaction database, meaning they don’t have visibility over whether they’re being significantly outperformed by their competitors, and merchants typically receive opaque or limited management information. Further, there is no standardization of definitions – some may measure approval rates by volume as opposed to value for example – which leads to a plethora of issues when determining whether performance is strong, or not. The payments industry suffers from a number of conflicts of interest which can lead to communication challenges throughout the supply chain. Issuers with a processing arm, for example, typically lack the incentive to communicate with other issuers due to competitive dynamics within the industry. In one case, a large merchant saw huge losses for six months following a fraud attack when one issuer responded with stricter rules despite the merchant having immediately implemented its own solution. All would have been better off if the processor would have communicated with other parties.
NETWORK
ISSUER
Overly aggressive post-authorization fraud rules can see payments declined that have been deemed non- fraudulent elsewhere in the supply chain.
FRAUD SCREENING
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