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How to Come to the Rescue of Your Merchants

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Payments Industry Fraud News

Would it surprise you to know that US merchants are experiencing fraud percentages in the neighborhood of 1.32% to 1.47%?

Would it surprise you to know that even though EMV is contributing to a drop in counterfeit card fraud, card-not-present (CNP) through online channels is exponentially on the rise?

Further, would it surprise you to know that the LexisNexis® Fraud Losses℠ tool shows that for every $1 a US merchant earns in revenue, their fraud cost is $2.40–which is up 17¢ from their 2015 figure of $2.23?

The Importance of Trends

These trends may seem jaw dropping at first.

However, when you consider the unbroken migration of larger e-commerce and m-commerce merchants to the internet, competing for greater shares of the US and international online business—it is perhaps easier to reframe perception.

Omni-channel merchants are encountering the greater share of fraud due mainly to their volume and higher ticket items. Accordingly, relevant payments industry trends are wake-up calls!

Innovative, competent, fraud solutions are in order for the payments industry.

In the past, going the extra mile and tracking payment channels and payment methods have often made a difference.

Currently, the success of fraud endeavors in remote channels is reportedly balancing between debit cards and credit card payment processing.

Payments Fraud Violates & Plunders Consumers, Merchants, & Merchant Services Alike

Julie Conroy, research director for Boston-based Aite Group, quoted in an article, Consumers OK with Extra E-Pay Security, But Banks Still Reluctant, published online 1 September by paymentsources.com, said, “Fraud is rising on all fronts, but the waters are muddy, making it hard to measure the effect of each type of fraud.”

Moreover, the article went on to further quote Ms. Conroy as saying, “The U.S. migration to EMV, which began in earnest with the October 2015 liability shift for counterfeit card fraud, is definitely part of what’s driving fraudsters to commit CNP fraud, but its effect so far is slight.”

EMV will be moving into its second year in the US soon, and more merchants are beginning to adopt this safer, chip-enabled, POS technology. Fraud with regard to in-store merchants is expected to be reduced as this trend continues.

What Else is Being Done?

Some US merchants are using a flagging system, automated in order to flag transactions that look fraudulent. However, there is still no way to understand how and why the fraud is able to take place, and merchants are often reluctant to confront paying customers.

Accordingly, international sales are also a complex problem for larger eCommerce and mCommerce merchant. Laws between countries differ and identify verification is even more difficult to confirm.

Notwithstanding the fact that these remote channel merchants are battling false positives, there is room for encouragement on the horizon. Without a doubt, as fraudsters seem to relentlessly attempt to scale the most secure walls of the payments industry, new identity layering technology is in the works along with better transaction protections.

The multi-layered approach is the consensus frontier.

The Payments Industry Reaction is Calculated

As ISO companies work with their merchant accounts to combat fraud in the payments industry, there are ways, through multi-layering techniques, and others, to help minimize chargebacks and fraudulent transactions.

The 2016 LexisNexis® True Cost of FraudSM Study is available on their website. Use the link to download a free copy for more information that is statistically valuable.

ISOs, bringing increasing customer awareness to their marketplace, are intentionally making the entire industry better. Armed with the latest trends in fraud, along with the greater measures with which merchants can endeavor to protect themselves—these agents effectively become crucial and valuable to their customers.

IRIS CRM brings this and other relevant topics to your attention, in an attempt to keep you informed on the cutting-edge of the payments industry.

Our goal is to participate in your success. Contact us to learn more about the ways in which we collaborate with our clients to enhance your business.

Following is a further takeaway, directly from the LexisNexis® True Cost of FraudSM Study, which you can download with the link provided:

Customer-Focused Solutions Relevant to Remote Channel Needs Include:

  • Identity Verification
    • Validate name, address and phone information
    • Reconcile name variations, duplicates, multiple addresses, and myriad other inconsistencies and linkages
    • Perform global identity checks with seamless integration and reporting capabilities
  • Transaction Risk Scoring
    • Identify risks associated with bill-to and ship-to identities with a single numeric risk score
    • Quickly detect fraud patterns and isolate high-risk transactions
    • Resolve false-positive and Address Verification Systems failure
  • Manual Research Support
    • Access billions of data records on consumers and businesses
    • Discover linkages between people, businesses and assets
    • Leverage specialized tools for due diligence, account management, and compliance
  • Identity Authentication
    • Authenticate identities on the spot using knowledge-based quizzes
    • Dynamically adjust security level to suit risk scenario
    • Receive real-time pass/fail results

For electronic payment breaking news, feature releases and industry developments, please subscribe to the IRIS CRM newsletter.


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