Retail Decisions Enables Alerts, Merchant/Issuer Collaboration to Fight Fraud

by Mercator Advisory Group 0

Payment gateway and risk management provider, Retail Decisions (ReD), has announced the launch of a new alert service that enhances its existing ReD Shield fraud prevention service and “enables issuers and merchants to easily exchange vital information in the fight against fraud.” The announcement cites a 43 percent reduction in merchant chargebacks as a key benefit. Merchants using ReD Fraud Alert within ReD Shield will now have the ability to leverage data resident in the card-issuing bank’s customer account profile to enhance their order approval and payment processing decision making processes, according to the announcement.

Erika Gallo, Director, Global Risk Management for ReD, commented; “ReD Fraud Alert is a significant development enabling merchants and issuers to share information about suspicious fraudulent activity. The new service ensures that crucial transactional information can be disseminated quickly and effectively, protecting issuers and their customers, as well as merchants who have suffered liability for chargebacks, the loss of goods and association fines.”

In recent trials, ReD has teamed with a large customer and global card Issuer to automate an effective way to reduce chargebacks by leveraging existing data and resources. The trial delivered a 43% reduction (by percentage of value comparing January 2011 to April 2011) in chargebacks. The step-change reduction in chargebacks from 2.14% to 0.16% over this period meant that throughput of transactions on high suspicious transactions increased dramatically for one leading card issuer.

The new service works by ReD sending a daily automated file containing details of high risk purchases to the issuer, if any suspicious activity appears on the customer’s account the issuer calls the cardholder to verify the transaction. Information is then automatically sent back to ReD to authenticate the purchase. Risk models receive transactional confirmed fraud input within two days of authorization, faster than that of chargeback data which averages over thirty-eight days, increasing fraud detection rates faster through adopting models.

Unlike the Address Verification Service (AVS) check that a merchant is typically limited to when verifying a transaction with the issuer, the merchant can now utilize the issuer’s more comprehensive verification process, which improves the accuracy of detecting fraud. ReD Shield Fraud Alert compliments the existing ReD Shield service which increases its clients’ revenue while minimizing losses from fraud thanks to sophisticated technology and a multi-dimensional approach to fraud detection and protection.

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