Many companies have diversified their payment platforms by offering multiple acquirers and payment methods for their customers. This approach is a critical way to diversify your payment stack and increase conversions. By having only one payment method like PayPal, you put your business at tremendous risk due to disruptions. Having multiple payment methods opens your business up to new markets and improved customer experiences. As a business, you want to provide as many options for your customers to buy your product successfully. If a customer doesn’t see a payment method or is declined, they like they might leave forever. This doesn’t mean you need hundreds of options, but it’s important to optimize your customer’s needs in each market. To delve into how payment orchestration and fraud prevention intertwine, we will first understand the concepts of each.
Payment routing can be completely transparent and done in the backend when new data is learned about the transaction. A business might show different customers multiple payment options depending on their account, fraud score, location, or device. For example, when I visit a site from my desktop on Chrome, I won’t even see Apple Pay’s option on some sites as it isn’t possible to use. However, I might see Google Pay or Stripe as options to complete my order. Companies that take all the signals about the user can better route users to their preferred payment methods. On the backend this could mean my payment is routed to a U.S. acquirer if my billing address is located in that country. For example, typically, international merchants have seen better results if the country of the merchant and customer match. There are countless ways to route a payment, and the companies that are adding in multiple routes are seeing improved conversions. While adding in routing used to be complicated, there are now fintech providers that make it much easier to implement. Gone are the days where you need to integrate each acquirer separately.
Universal tokenization is possible now, where payments can be easily routed for each transaction. Another example of payment routing is you have a customer that seems risky, and you don’t want to risk a chargeback with your acquirer to ensure preferential treatments. For the first transaction, you can ensure 3D secure and CVV match is required for this user. However, on subsequent purchases where your fraud tool recognizes the user as good, we can route to another gateway with lower fees. This is where we can start seeing how payment orchestration and fraud prevention work hand in hand. The key is to have healthy competition between your payment methods and fraud prevention to see which ones are right for your business. After a while, you will start to see trends where one payment method might be better at detecting fraud, which results in less friction for all users with that method.
Securely Routing Payments
Fraud optimization means we start adding dynamic friction and try to create the most optimal experience for customers. However, for fraudsters, we want the right friction in place to stop them from continued attacks. We want to take the same approach that most businesses have of providing multiple payment methods to offering multiple verification methods too. Having one verification method is just as bad as providing one payment method. Both fraud optimization and payment orchestration are aligned on the same goal in growing the company’s revenue at an acceptable risk level. Risk management works best when it is integrated into the business to make sure everyone is working together. That is why syncing the payments team with fraud will create a strong foundation for your business. Routing payments can become complex when you add in fraud scoring as another factor. Trust Swiftly has seen examples of leveraging fraud optimization to enhance payment orchestration further.
Payment Methods and Example Routing
There are many methods for payments, and a few examples are outlined below on risk management. Credit cards typically cause the most fraud for online merchants. Depending on the payment method, you should adjust your risk management to ensure optimal conversions. For example, a new user with high risk will have their payment routed to a high-security gateway like Cybersource, leading to more verifications if needed. Another approach we have seen clients take is to restrict specific gateways with low fraud prevention to users that have completed Trust Swiftly checks.
If a user already verified their phone and card, they can be granted other methods such as Amazon Payments. Another optimization is if a gateway like Stripe rejects higher value or risky orders, then we can route it to one of the backup gateways like Chase Paymentech. The best approach is to have an adaptive system that can mix and match friction to the right payment methods. As a global business, when you start accepting more payment methods, you need to adjust your friction levels and start using the fraud insights to orchestrate payments.
Cards (Credit/Debit/Prepaid, brands) – Each card brand will have varying levels of fraud but from an industry view Mastercard and Visa are the ones you need to worry about.
Mastercard- Risky user requires 3Ds and zip code validation for AVS.
Visa – Low risk user requires no CVV and allows AVS mismatches.
Amex / Discover – Fraud rates are typically lower which allows for minimal friction.
UnionPay / JCB – Route to local acquirers with minimal fees.
Amazon Payments – Limited payment information learned but fraud rates low due to Amazon’s ability to prevent fraud. Require little friction.
Apple Pay – Fraud rates lower due to Apple device requirement. Require low friction.
Google Pay – Fraud rates lower due to Google’s added security. Require low friction.
Venmo (Apps, Cash, etc.) – Fraud rates lower due to less adoption among fraudster. Require low friction.
Gift Cards – Difficult to reverse. No friction required.
Skrill Wallet – Difficult to reverse. Little friction needed.
PayPal Wallet – Easy to dispute. Treat as similar to credit cards.
Wechat / AliPay – Difficult to reverse. Little friction required.
Western Union / Moneygram – Difficult to reverse. Little friction required.
Sofort / iDeal / Local Banking Transfers – Difficult to reverse. Little friction required.
Prepaid Cards – Difficult to reverse. Little friction required.
Cryptocurrency – Not reversable. Little friction required.
In the end, payment and fraud orchestration are one system working together. The collaboration between the functions is how businesses can grow at scale and globally. Trust Swiftly is working to bridge the gap between these critical components of your business. Don’t get stuck in the past with a legacy strategy towards payments and fraud. Our solution offers a no-code approach to payment and fraud optimization. Add in fraud orchestration quickly by combining the best eCommerce approaches for your business. Each optimization implemented will put you on a path for growth with no fraud.