Safety First: Visa's Value-Added Services Help to Protect Against Fraud
The payments ecosystem has seen huge changes in the way we move, keep, and spend our money. The shift to a digital landscape has created myriad opportunities to transfer, share and use our finances locally and globally.
The introduction of chip and pin, tap to pay, tokenization, and many more innovations, means it can be easy for clients – both individuals and businesses – to take their financial safety for granted.
Afterall, with so many security checks, authorizations and confirmations required with each spend surely the threat of fraud is, much like paper money and old metal coins, becoming a thing of the past?
While it is true that cases of fraud are declining – issuing card-not-present (CNP) fraud rate fell 24% in 2021 compared to 2020 across Visa’s network in CEMEA1 – the danger still exists, and the threat still looms large. If left unmonitored, unchecked, and unsecured, even the cashless payments landscape could be vulnerable to all manner of criminality, from sophisticated online hacking and account manipulation to the cloning of cards.
At Visa, this is a problem we are committed to tackling head on as we establish digital payments as the safest and most convenient way to pay and be paid.
Visa Risk Manager (VRM) solution enables real-time approval or rejection of consumer-initiated transactions. Our clients can choose from dozens of data points available in VRM to design, test & deploy authorization & decline rules: merchant name, category, geography, ticket size, and many more. Visa’s advisory team is always available to share expertise on rules management & optimization to achieve optimal performance results. Our recent experience suggests that rules optimization on VRM typically helps clients to recover 3-5% of payment volume by reducing the number of ‘false positive’ declines and also prevents fraud losses between 0.2% and 0.5% of the payments volume processed. These are not only millions of dollars of revenue earned for our issuing clients but also millions of dollars saved for their cardholders.
Extermination of fraud in payments is our ultimate priority, and when fighting ever more sophisticated fraud, data is our most precious resource.
Visa Advanced Authorization (VAA) score is another weapon in our armor which allows us to dramatically improve the accuracy & predictive power of VRM rules. This score assigns risk of fraud to every single transaction, based on the power of VisaNet data behind it.
Visa’s deep understanding of ‘good’ and ‘bad’ payment patterns across all the markets allowed us to develop machine learning models that are scoring & assigning fraud risk level to attempted transactions before they are authorized, real-time, at a pace of 65,000 transactions a second, analyzing more than 500 unique transactional attributes to stop fraud before it happens. One service alone, Visa Advanced Authorization, helped prevent an estimated $26 billion in fraud in 2021. The other side of preventing fraud is minimizing false customer declines. To that end, Visa applies the latest deep learning techniques to reduce false declines by as much as 30 percent.2
Recently Visa expended the functionality of its VAA/VRM solution to become Network & Scheme Agnostic. In a nutshell it means that not only Visa-branded transactions can be scored & authorized leveraging Visa’s online decision-making engine. Transactions from other payment networks, including domestically processed transactions and on-us volumes, can also be scored & subjected to a set of rigorous decision-making rules. VRM Network & Scheme Agnostic solution brings the best of Visa to multi-brand issuers: now, it is no longer necessary to implement & maintain different fraud management systems for different card brands as VRM NSA will enable rules-based authorization for the entire portfolio.
One may think that these solutions are developed & promoted in the interest of Visa’s banking clients, but actually it is the whole ecosystem that benefits from Visa fraud management solutions. As for merchants, they increase the volume of safe and profitable business when ‘false positive’ transactions are no longer declined, and end consumers can fully enjoy all the benefits & privileges of their cashless solutions without fraud risk exposure.
Regardless, if it’s one dollar or a million that is lost by an individual or a business, the damage inflicted from fraud can be long term, reputational and institutional. While fraudsters are still at large, Visa is unwavering in its commitment to staying one step ahead, of creating more hurdles, more inaccessible barriers, to block their path. Our clients rely on our unwavering vigilance. Because we know that the best way to tackle fraud is to prevent it from happening in the first place.
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