Managing Fraud in Card Payments

Over the past two decades, the use of cards to pay for goods and services has grown exponentially. At the same time, the ways in which cards are used has continued to evolve and now covers:

• In-store purchases — using chip, magnetic strip, contactless and mobile enabled payments
• Mail order and telephone purchases (MOTO).
• Online purchases.
• Purchases at remote terminals, such as vending machines.
• Contactless payments.
• Cash machine withdrawals.
• Mobile wallet and e-commerce payment mechanisms.

Modern consumers have evolved to demand the convenience of booking online services, such as taxis, and expect their payment to be managed seamlessly via their chosen payment card.

All of these channels or payment mechanisms can become a target for fraud. As fraud is tackled in one, the fraudsters adapt and move on to where they see the next weakest target. At the same time as tackling fraud, payment service providers, such as card issuers, must ensure that their legitimate customers are not negatively impacted by fraud checks. It’s a delicate balancing act and they must:

• Prevent as much fraud as possible before loss occurs.
• Allow as many legitimate transactions as possible to proceed without interruption.
• Smooth the process and get transactions back on track as quickly as possible when fraud intervention is necessary.

FICO's fraud solutions take a holistic approach and work across any channels where cards are used. As fraud changes, our machine learning technology responds to new fraud patterns, in real time, before a human could. By layering different types of machine learning and advanced analytics, we use artificial intelligence to identify fraud cases accurately and reduce false positives. Our fraud solutions can determine how to communicate with customers and execute those communications. Automating the fraud resolution process improves customer experience when transactions must be reviewed.