Ai Editorial: Stepping up card payment conversion via deeper introspection

3rd Februrary, 2020

Ai Editorial: Dealing with credit card decline codes is a daunting task. Ai’s Ritesh Gupta explores how a deeper analysis of these codes and collaborative approach can help in payment authorization.

 

Evaluating ways to improve upon approval rates for online card payments is always high on the agenda of travel merchants.

Independently travel e-commerce players are looking at ways to seamlessly authenticate users across the omnichannel customer journey. The role of cloud-based intelligence, backed by artificialintelligence and machinelearning, is coming to the fore. Assessment of both risk pointers and positive identity indicators is the way to go. This way travel merchants can better comprehend the context of a shopper, their behavior, and their score in terms of digitalidentity trust and risk. Other than ensuring that a legitimate shopper shouldn’t suffer owing to a wrong decline of a card, travel merchants also need to be in control of processing costs as well as focus on fraud prevention. There is no secret sauce for all this in the payment landscape, but crafting an astute authorization strategy is an ongoing effort that demands continuous introspection. Working with other stakeholders holds key here.

When it comes to authorization and acquiring for more than one market or cross-border transactions, a merchant can assess options such as  working with a payment services provider, setting up a local legal entity and entering into merchant agreements with local acquiring banks etc.

Coming to grips with soft and hard declines

Technically, credit card rejection happens when a card payment cannot be processed and the transaction is declined by the payment gateway, the processor, or the bank issuing the money. A credit card decline code is a message issued in response to a request for authorization during a transaction.

It is here dealing with the travel shopper in an apt way – via a simple and transparent communication – can help.

According to Chargebacks911, the issue is credit card decline codes are not standardized; they differ from one payment gateway to the next. They also tend to be rather unclear, as this helps in shielding the cardholder’s privacy and avoid giving away sensitive information in the event of a genuine fraud attack. Details pertaining to why a payment tends to get rejected can be provided by an acquirer and this in turn can boost the conversion rate. As Ingenico points out, even though the rejection or response codes offered by acquirers may appear dauntingly technical, it’s extremely useful to understand what they mean.

Adyen recommends that  profile of each transaction needs to be considered based on its amount, if it’s recurring, local regulations, issuers' authentication preferences, your relationship to your shopper, and more.

Some declines may be the direct result of the cardholder's actions while others are the result of external factors. The most important distinction is between “hard” and “soft” declines. A hard decline happens  when the issuing bank or processor denies the processing of the transaction and retrying the card won’t help at all. Hard declines are not recoverable at the time of the transaction. Whereas soft declines are generally a temporary issue. Retrying the provided payment method information may be successful.  One way to deal with such scenario is to automatically route selected failed transactions to a secondary acquirer for a “retry”. This can increase authorization with virtually no impact on the customer experience, asserts Ingenico. Essentially merchants need to constantly explore ways to salvage such situations.  A partner should be adept at analysis of past declines, transparent data, ongoing analysis of global transaction types etc. Also, developments like PSD2 are all about more carefully processing and managing data, including payment transactions.

PSD2 SCA 2020 - how to go about it as a travel merchant?

Not just merchants

And it’s not just merchants, but even other stakeholders, including card schemes and issuers, too, are focusing on sorting some common issues that tend to block transactions that simply should not have failed in the first place.

Traditional companies are stepping up their efforts  in the wake of increasing competition from alternative form of payments plus new developments that are fueling emergence of fintech digital payment specialists. For instance, it is being acknowledged that as a vital link in the payment chain issuers need to share relevant details regarding why the transaction has been declined. Many tend to supply response codes that are ambiguous and tough to comprehend. And in certain cases such codes cannot be interpreted at all. Effective fraud prevention and detection requires real-time collaboration and data sharing. In fact, with a collaborative approach where data on fraudulent and suspicious transactions is shared (and keeping it anonymous, too, where required), details are out on new fraud attempts no matter where they first appear.  But all of this demands a diligent effort. For instance, considering the case of passing SCA or Strong Customer Authentication  messages through complex transaction flow in the travel e-commerce sector.  

It is imperative for merchants to work collectively internally (fraud and risk management, customer service, operations, technology and product management teams) to optimize authorization and fraud strategies, and work with various external stakeholders as well for the same.

 

Keen on exploring fraud prevention and payment-related issues?

Check-out Ai’s conferences scheduled for 2020: https://lnkd.in/fE7UK_T

 

Ai Editorial: Why uncovering patterns of fraud with one approach won't work?

23rd January, 2020

A study, by Sift, has shared that fraudsters are moving freely from one fraud type to another. With data breaches, it is easy for hackers and fraudsters to gain additional information and plan other types of fraud beyond payment fraud.

 

A unified or a blanket approach to dealing with various types of frauds that exist in the e-commerce sector isn't going to work anymore.

The travel e-commerce sector, being a lucrative proposition for fraudsters, remains a prime target. Fraudsters are always looking at new methods to discover an  enterprise's vulnerabilities. So travel merchants not only need to be vigilant of the types of fraud but also be prepared to deal with them discretely.

Fraudsters are becoming better at what they do. They are increasingly going after more than one type of fraud. Plus, fraudsters commit fraud in more than one industry. According to an analysis by Sift, fraudsters are moving freely from one fraud type to another.

As for the types of fraud, the list includes payment-related fraud (unauthorized payment transactions, featuring stolen credit cards, debit cards etc.); new account or fake account (created by a fake identity, a fraudster or bot signing up for an account using another person’s real identity/credentials) and account takeover (a genuine user creates an account, and a fraudster later gains access to it and uses it for fraud). Sift also referred to fake content and fraudsters abuse promotions by redeeming coupons multiple times, or by creating fake accounts to redeem additional promotional offers.   

Looking beyond payment-related fraud

The latest analysis, based on the team's study of over 34,000 sites and apps in Sift’s customer base, with "data breaches making users’ credentials readily available on the dark web, it’s easy for bad actors to obtain additional information and attempt other types of fraud beyond payment fraud".  

Some of the other key findings:

  • Highlighting the way fraudsters continue to move ahead and pose new threats, the study indicated that various verticals are targeted concurrently. And whether those verticals are connected or not, doesn't matter. While digital e-commerce is the industry most plagued with fraud, fraudsters move fluidly from one industry to another, attempting multiple types of fraud. Fraud is not linear, but rather an interconnected web.

- 78% of fraudsters who start in digital e-commerce are also likely to commit fraud in another industry.

- 86% of fraudsters commit fraud in more than one industry.

  • In the list of the "fraudiest" industries, the travel sector is at the third spot. The top two sectors are digital e-commerce and physical e-commerce.

With such cross-industry focus of fraudsters, it is must for stakeholders to find out how the culprits find ways to hide or execute malicious tactics. Merchants and fraud prevention specialists acknowledge the significance of the same. For instance, spoofing has become more commonplace. Fraud is more complex than ever, and the only way to battle it out with fraudsters is to comprehend the perpetually evolving fraud landscape.

 

Keen on exploring fraud prevention and payment-related issues?

Check-out Ai’s conferences scheduled for 2020: https://lnkd.in/fE7UK_T

 

Ai Editorial: Payments - a fascinating discipline to follow in 2020

21st January, 2020

Ai Editorial: Travel merchants are prioritising speed, trust and security when it comes to the payments-related experience. This, along with balancing CX and fraud prevention, and responding to regulatory requirements, are some of the priorities for 2020, writes Ai's Ritesh Gupta

 

There are several prevailing trends that today make payments a fascinating discipline to follow. Merchants and other stakeholders are keenly following the evolving payment economics, new standards set up to govern the flow of money, what's paving way for cost reduction and revenue optimization, dealing with fraud attacks etc.

For travel e-commerce players, their main priority is to simplify the checkout experience. Cart abandonment remains an issue, and losing out on a conversion is a huge painpoint. In addition, to this there are several other aspects.

The list is as follows:

·          Letting travel shoppers being in control: A recent study commissioned by PayPal to evaluate key trends related to mobile shopping habits and merchant readiness indicated that merchants must offer mobile optimized experiences if they are interested in attracting and maintaining younger consumers, such as GenZ and GenY. According to Amadeus,  24% of travelers still abandon their purchase because there are too many steps in the checkout experience.

In a recent blog post, Jeremy Dyball, Head of Commercial, Payments, Amadeus, mentioned that with the rapid pace of payments innovation, "a number of advances from simplified foreign exchange, to a raft of new payment methods and easily accessible instant credit are combining to make a smooth and hassle-free payment experience tantalizingly close". According to him, it's time to embrace the new era of frictionless airline payments.

·          Balancing CX and fraud prevention: Security and trust are significant considerations in consumers’ mobile purchasing decisions. Globally, 51% of consumer respondents would be less likely to engage with mobile commerce due to security concerns, according to the same PayPal study.

As LexisNexis Risk Solutions highlights, a frictionless customer journey “doesn’t equate to an absolutely friction-free experience. It’s about having the right type of friction, with the right action, at the right time. You have to figure out where and what that is”. From a shopper’s perspective, friction could be any feature or requirement that hinders their path through the sales funnel. It could be a compulsory registration, wearing form-filling and time-consuming authentication processes. For a seamless and secure experience, airlines need to embrace dynamic friction.

As Sift’s Trust and Safety Architect, Kevin Lee points out; merchants can’t get away with their airport screening approach. Travel e-commerce players have to ensure trusted shoppers or consumers can sidestep added authentication, while potentially risky users undergo that further screening. Since there is so much of data from customers via the app usage, device usage etc. there is a need to use behavioural fiction or behavioural dynamics looking at the signals to identify normal behaviour for an authentic shopper on an app or an online platform. And then being in a position to spot an anomaly where certain behaviour doesn’t seem to be normal. Then only there is a need to introduce certain friction or additional check in the shopping process. 

Highlighting e-commerce fraud trends in 2020, Riskified asserts that realistically, merchants can address fraud by leveraging the best fraud management solution: one that evolves to adapt to the latest attack vectors, with technology that can both register and analyze the vast amount of e-commerce data flows.

·          Payment flow: Other than counting on data for spotting fraudulent transactions or anomaly in behaviour, travel merchants are assessing the prowess of payment analytics and evaluating key metrics pertaining to the overall payment flow. Primarily, the focus is on the associated cost with each transaction, the rate of authorization, and the chargeback ratio. Delving deeper, payment specialists are counting on analytics for assessment of the risk profile, the relevance and performance of the acquirer, fee for alternative payment solutions etc. It is worth following how data and algorithms are shaping up to contribute both in terms of cost reduction and revenue optimization.

·          Regulatory environment: Regulations like PSD2 are paving way for new services and faster payments. PSD2 or the payment services directive in Europe is being associated with a major change in payments and data protection, and it is expected to fundamentally change the value chain. "PSD2 is opening up the (payment) industry, and breaking the monopoly of certain players on accepting payments," Simon Eve, Head of Travel, Trustly, told Ai in an interview last year.

The SCA requirements were originally planned for the 14th of September last year (with new migration completion deadline being 31st December 2020), but still concerns pertaining to PSD2 making online shopping more difficult and the same negatively impacting cart abandonment rates in the initial years of implementation are being highlighted.

·          Technology and digital commerce: Emergence of new technology or devices along with Internet connectivity means the need for payments to be processed automatically is already there. Overall, there is a need to keep an eye on options available for completing a transaction. So be it for things of IoT, which essentially refers to any kind of device, appliance or vehicle that can connect to the Internet, or the role of cloud services, merchants need to explore the emerging commerce features in a proactive manner. At the same it is vital to ensure that measures are in place for basic security and authentication.

 

Keen on exploring fraud prevention and payment-related issues?

Check-out Ai’s conferences scheduled for 2020: https://lnkd.in/fE7UK_T

 

Ai Editorial: Establishing a proactive data protection mechanism

17th January, 2020

Ai Editorial: Data security and privacy-related initiatives are now a priority, and travel merchants have to embrace proactive and appropriate tools for the entire organization, writes Ai’s Ritesh Gupta

 

It is imperative for organizations to capitalize on personal data, and at the same time address concerns pertaining to privacy and misuse of such data.

So if on one hand, travel merchants are sharpening their initiatives associated with collecting, sharing, analyzing and processing data, on the other it has to be ensured that data is secure and complies with the latest data privacy regulations. The arena continues to evolve with relatively new regulations, including the General Data Protection Regulation (GDPR), which came into force in May 2018, and the California Consumer Privacy Act (CCPA).

Some crucial topics that are being discussed are how to protect data at the source level, how to avoid heavy data exfiltration,  what does constant modernization of data operations entail etc. Also, what are the requirements of privacy laws- opt-in and opt-out options?

Gearing up for data privacy challenges

Certain areas that demand attention are:

  • Data governance: As IBM Analytics recommended in a presentation at one of Ai’s conferences in the past, working out a robust data governance tool is must. Profiling each data to answer who, what, where, when and how, and to make this metadata available is fundamental. Basically, for each data, you need to understand what is the data all about, who owns it, where did it originates, where is it kept, when did it get there, and how is it processed. Only via such tool, a merchant can deal with vital components such as the "right to be forgotten" article in GDPR since data subjects have the right to request the deletion of their data and not to be contacted again. A registry that provides directory services to point to where customer data resides in different systems in a company is must, too.

Plus, IBM also recommends an operating model – starting with an assessment across governance, people, process, data and security, then finalizing standards that cover governance, training, communication, privacy, data management and security management. Post this, there is provision for  detail data discovery and embed standards, procedures, and tools to enhance existing processes. And there is also necessary training to ensure skills transfer. Finally, all relevant business processes and security control are executed.

  • Understanding consent requirements: With various privacy laws that exist today, organizations need to comprehend consent requirements. What does consent entail? That’s the first step. For aspects such as the “right-to-be-forgotten” one, companies need to rationalize the entire process, especially considering that data is distributed in several ways and tends to be hosted in cloud-based and on-premises environments.  Being in control of what and where (in terms of deployments)  data is stored become critical. A privacy-by-default approach to data storage becomes must.
  • Protection teams: Organizations also need staff with expert knowledge of data protection law and practices, risk assessment evaluation (data breaches and cyber attacks) etc.  

This approach is becoming a necessity, considering that fact merchants not only need to counter the threat of a breach via a risk-adaptive defense mechanism, but also for ease of operations for any entity operating in the connected digital landscape. Projecting how the cybersecurity strategy is going to shape up in 2020, Forcepoint indicated that the same will move from “indicators of compromise to indicators of behavior” and will focus on comprehending risks that lie within and the importance of preventing data theft no matter the user, device, transfer medium or cloud application.

 

Keen on exploring data privacy and protection issues?

Check-out Ai’s conferences scheduled for 2020: https://lnkd.in/fE7UK_T

 

Ai Editorial: PSD2 SCA 2020 - how to go about it as a travel merchant?

10th January, 2020

Ai Editorial: The PSD2 Strong Customer Authentication (SCA) migration completion deadline for online payments in Europe continues to be a weighty issue, with concerns about the preparedness and compliance still coming to the fore, writes Ai’s Ritesh Gupta

 

The SCA requirements were originally planned for the 14th of September last year (with new migration completion deadline being 31st December 2020), but still concerns pertaining to PSD2 making online shopping more difficult and the same negatively impacting cart abandonment rates in the initial years of implementation are being highlighted.

As for the travel sector, a study by Amadeus in September had indicated that only one in three travel merchants were expected to be SCA-ready for the September-2019 deadline. The report featured 50 large travel firms (€1billion+ revenue).  

Concerns

All the stakeholders acknowledge the complexity of the payments markets across the EU and the hurdles resulting from the amendments that are needed.

As per the findings of a survey in December last year, (commissioned by Riskified, featuring 2,000 consumers and 200 retailers evenly split across the UK, Germany, France, and Spain):

  • A third of shoppers would leave a site/app when asked to verify their identity.
  • 80% of European retailers expect that PSD2 will negatively impact cart abandonment rates. Nearly 50% expect a significant increase (of 20% or more) in shopping cart abandonment rates.
  • Almost 40% of European merchants are pessimistic about PSD2’s ability to curb fraud.

The top three authentication methods being studied by issuers include; One Time Passwords (OTP) (SMS to a mobile device), authentication within a mobile banking app, and 3DS. Among these, OTP and 3DS authentication are expected to adversely impact the user experience. Specialists recommend that merchants should use exemptions where possible. Also, by using fingerprints or facial recognition, one can combat fraud while also increasing convenience for consumers.  

PSD2 SCA 2020 plan   

Even as the European Banking Authority asserted that the definition of SCA had been set out in PSD2 when it was published in 2015, a section of the industry states that the authority has failed with PSD2 at least in the short-term.  Moving on the industry clearly needs to make fraud prevention and compliance efforts a priority. In terms of how the roadmap is going to shape up this year, the extension offers various players (issuers, acquirers, PSPs and merchants) extra time to entirely support EMV 3DS 2.1 and 2.2 by the end of this year. One can expect an incremental EMV 3DS execution with the new deadline.

Merchants need to test, preferably a flexible offering that can set up both 3D Secure 1 and 2 authentication protocols. This way if a specific issuer isn’t ready to support 3DS2, then the offering will by default redirect transactions to 3DS1.

Ingenico ePayments recommends following steps to prepare for the authority’s deadline:

By March 2020: integrate 3DS in your payment flow

  • For merchants who have not implemented 3D yet, recommendation is to go straight to EMV 3DS 2.1 (skipping the implementation of version 1).
  • For merchants who already have 3DS version 1, recommendation is to start implementing EMV 3DS 2.1.

By July 2020: use EMV 3DS 2.1 in your payment flow or be ready to do Step Up with EMV 3DS 2.1

By September 2020: SCA exemptions are available with EMV 3DS 2.2, if exemptions are not supported than all transactions will require 3D.

With this incremental approach, merchants will fully support EMV 3DS 2.2 by the 31st of December 2020.

 

Keen on exploring fraud prevention and payment-related issues?

Check-out Ai’s conferences scheduled for 2020: https://lnkd.in/fE7UK_T

 

Ai Video: Balancing CX and fraud prevention with dynamic friction

6th January, 2020

It is imperative for travel merchants to focus on dynamic friction, a fraud prevention approach which focuses on behavioral and situational attributes to apply right friction to the right person at the right time, writes Ai's Ritesh Gupta

For any entity that is looking at balancing customer experience and fraud prevention, doing away with legacy fraud-fighting solutions is must as it tends to apply friction in a blanket, indiscriminate way to all users, customers and fraudsters alike. With dynamic friction, risk level is assessed in real-time so that merchants can offer safe, convenient, and customized user journeys that only become more accurate and appropriate over time.

Sift Trust and Safety Architect, Kevin Lee, shared that while 99% of users on a website are legitimate, there still needs to be protection from the ~1% of users that are attempting abuse.

Keen on exploring fraud prevention and payment-related issues? Check-out Ai’s conferences scheduled for 2020:

https://lnkd.in/fE7UK_T

 

Ai Video: Advancing towards seamless + secure ecommerce

29th November, 2019

Travel merchants can't apply the so-called "airport security" approach for screening every transaction.

Rather there is a need to identify astute options to ensure the booking flow isn't unduly disrupted for legitimate shoppers. Companies have to leverage a shopper's fraud and risk score in order to ensure UX and fraud prevention aren't at odds with each other.   

This way they can take a vital step towards seamless plus secure ecommerce.

Ai Video: Counting on diversity for controlling e-commerce fraud

25th November, 2019

The significance of hiring the right people as organizations try to curb various forms of e-commerce fraud must not be undermined.

“Diversity (while recruiting people), specialized knowledge/ skills, and training and support (is key to curbing fraud,” said Tina Burgess, Senior Manager of Risk and ePayments, Points.

Ai’s new 2020 conference dates:

http://www.airlineinformation.org/upcoming-events2/370-2020-conference-dates.html

 

Ai Editorial: Detecting deepfakes to combat identify fraud

15th November, 2019

Ai Editorial: Deepfakes supported by AI techniques today are considered to be a growing problem. It is vital to build AI systems that can automated deepfake detection so that risks such as identity fraud can be tackled, writes Ai’s Ritesh Gupta

 

Artificial intelligence (AI)-based identity fraud is emerging as a serious issue. Recognition of one’s voices and face as a way to validate a person’s identity is under scrutiny with the rise of synthetic media and deepfakes. Be it for security-related risks, user privacy concerns or fraudulent transactions, repercussions are being probed at this juncture.

Technology to manipulate images, videos and audio files is progressing faster than one’s ability to tell what’s real from what’s been faked. According to the findings of a study released last month, the number of deepfake videos almost doubling over the last seven months to 14,678.

The level of sophistication with which fraudsters are moving ahead is exemplified by the recent case in which an executive was duped into transferring $243,000 to a bank account, or even the news of top AI-researchers in the U. S. struggling to cope up with computer-generated fake videos that could undermine candidates and mislead voters during the 2020 presidential campaign. Such cases of fake phone call or a video file show how deepfake techniques are encroaching in the lives of the people in a wrong way.

Deepfakes are powered by deep learning AI. The algorithms behind this AI are fed large amounts of data. Eventually, by capitalizing on such data, “deepfake” videos manipulate audio and video using AI to make it appear as though someone did or said something they didn’t. It does pose a challenge to validating the legitimacy of information presented online.

The case in China

Zao, a free deepfake face-swapping app, not only exemplified how quickly deepfakes have gone mainstream but also triggered a privacy backlash amid concerns about identity theft. The Chinese app allows a user to use their photographs and then its AI engine changes their faces with those of celebrities featuring in video clips. Zao amended its policies, and stated that the app will not store the biometric information of users and transferring of data wouldn’t be done without consent.

This privacy storm was mainly in China, but the threat of this trend was acknowledged everywhere since the app indicated how the technology is now available for smartphone users. In no time, questions were raised about the possibility of payment-related fraud, too. With biometric technologies such as Alipay’s ‘Smile to Pay’ being increasingly adopted as a form of payment across China, the concerns were valid. Alipay currently serves over 1 billion users. Ant Financial Services Group, which operates Alipay, stated that its facial recognition capabilities were safe and its facial payment system won’t be breached. It also emphasized that the team has implemented rigorous, best-in-class privacy, security and risk control processes.  

What is coming under inspection is the efficacy of biometric security measures such as the voice and facial recognition. Can it be compromised by deepfakes that can almost perfectly imitate these features of a person?

Combatting threats

Initiatives are in the pipeline, focusing on automated deepfake detection.

Identity verification specialist, Jumio highlighted that it is “vitally important to embed 3D liveness detection into identity verification and authentication processes”. The company is working on plans to combat advanced spoofing attacks including deepfakes. Its offering was recently introduced as a beta.   

Facebook was recently in news for working on a ‘de-identification’ technology to morph a person’s face so that they remain unrecognisable to facial recognition technology.

Amazon Web Services (AWS), Facebook, Microsoft and other organizations have recently committed to initiatives that encourage work on technology that can be deployed to better detect when artificial intelligence has been used to alter a video in order to mislead the viewer. AWS has indicated that building deepfake detectors will require novel algorithms which can process a vast library of data (more than 4 petabytes). Established organizations have chosen to collaborate as it is being widely acknowledged that it is important to have data that is freely available for the community to use. For instance, Facebook is commissioning a realistic data set that will use paid actors, with the required consent obtained, to contribute to a challenge. No Facebook user data will be used in this data set, according to the company. Concrete results, especially better detection tools, are being awaited as the likes of Facebook and Amazon admit that identifying manipulated content and deepfakes is a technically demanding and rapidly evolving challenge. 

Deepfakes aren’t fading away, and their consequences are being felt on a global scale.

 

Hear from fraud prevention and cybersecurity experts at Ai’s next ATPS –

http://www.airlineinformation.org/upcoming-events2/370-2020-conference-dates.html

 

Ai Editorial: Leveraging dynamic friction to only target dodgy shoppers

13th November, 2019

Ai Editorial: Authentication of risky shoppers shouldn’t hamper the digital experience of all. Rather merchants must focus on finding ways to applying the right friction to right person at the right time, writes Ai’s Ritesh Gupta

 

Filling a form, verifying a payment method, registering for an account…when a shopper is presented with such options in the booking flow, it evokes resentment. No one likes to spend extra time or make that additional effort to verify their identity knowing that they are legitimate shoppers.

But travel merchants have to ensure that the least number of fraudulent transaction slip through. Key then lies in identifying that anomalous shopping behaviour in a more shrewd way that doesn’t screen every shopper!

As Sift’s Trust and Safety Architect, Kevin Lee points out; merchants can’t get away with their airport screening approach. Travel e-commerce players have to ensure trusted shoppers or consumers can sidestep added authentication, while potentially risky users undergo that further screening.

“They (merchants) need to focus on dynamic friction,” said Lee. “The concept means having the ability to apply the right friction to right person at the right time.”

The team at Sift describes it as the optimal application of friction to user journeys based on behavioural and situational attributes, applying it to the right person at the right time.

Many companies have this airport security approach where everybody has to go to two-factor authentication (2FA), enter CAPTCHA etc.

“Honestly that’s a terrible experience because 99% plus of consumers on a platform tend to be legitimate. They just want to move from A to B (or shop legitimately with any retailer),” said Lee.

So how to apply dynamic friction and what sort of signals can be used? Since there is so much of data from customers via the app usage, device usage etc. there is a need to use behavioural fiction or behavioural dynamics looking at the signals to identify normal behaviour for an authentic shopper on an app or an online platform. And then being in a position to spot an anomaly where certain behaviour doesn’t seem to be normal. Then only there is a need to introduce certain friction or additional check in the shopping process. 

For example, looking at a certain security measures for a particular fraud, MFA is deemed to be an astute way of shielding user accounts, since hackers or fraudsters don’t often have access to the additional factor required to authenticate. But merchants fear that the introduction of MFA would cause friction. The way to go forward then is to capitalize on dynamic friction, because the judicious use of this authentication method doesn’t disturb the experience of authentic users and only those go through the MFA that fall in the category of risky users.

Also, the specialists ensure that as a shopper moves from the discovery process to the completion of the transaction, all interactions are assessed for risk. In case a risk touches a given threshold, extra verification comes it play. If the interactions come across as reliable, that extra authentication is eradicated, providing the shopper a more rationalized experience.

So in case of account takeover protection, the real-time risk evaluation suggests the level of authentication a particular shopper/ consumer should go through. Riskier actions with more red flags trigger MFA, while suitable actions pave way for a smooth interaction.

Dynamic friction in the travel sector

The application of dynamic friction in the travel sector, especially among airlines, is poor at this juncture, said Lee.

What tends to happen is that there are lots of legacy systems and rules in place to stop illegitimate shopping from happening. But 100% rules-based fraud prevention isn’t proving to be an ideal solution today. It’s not dynamic enough, it’s not fluid enough, said Lee. All of this is important since consumer today are very demanding when it comes to what they purchase, when, how and where they purchase. And that’s where machine running has contributed in terms of responding not only to new types of fraud but also to better recognising legitimate shopping behaviour. 

Sift recommends an apt blend of risk and revenue decisions:

  • Rather only looking at shielding the bottom line, also evaluate how to deliver a superlative UX while mitigating risk.
  • Embrace a growth mindset - Customer data is leveraged across all teams to make decisions that balance growth initiatives with risk policies.
  • Machine learning fraud prevention leverages customer data to assess risk in real time and route users to the appropriate experience based on that risk.

Ai’s new 2020 conference dates: http://www.airlineinformation.org/upcoming-events2/370-2020-conference-dates.html

 

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