Visa Inc. · NYSE:V
Visa — Conference Presentation (November 2015)
32 slides from Visa's conference presentation, Nov 17, 2015
Slide 1: Strategies to Effectively Mitigate Fraud
Strategies to Effectively Mitigate Fraud 17 November 2015 Stan Hui, Director – Merchant Risk Cory Siddens, Senior Director – CyberSource Risk Solutions Visa Public
Slide 2: Disclaimer
Disclaimer The information or recommendations contained herein are provided "AS IS" and intended for informational purposes only and should not be relied upon for operational, marketing, legal, technical, tax, financial or other advice. When implementing any new strategy or practice, you should cons
Slide 3: Overview
Overview 3 | Strategies to Effectively Mitigate Card Not Present (CNP) Fraud | 17 November 2015 Visa Public
Slide 4: Overview
Overview • Visa’s objective is to educate acquirers and merchants of fraud and chargeback issues which may arise during the holiday shopping season – Retailers may realize significant increase in holiday sales from October to January with corresponding fraud and chargebacks increases in October to M
Slide 5: Targeted Industries and Products
Targeted Industries and Products • Key Sales Channels Covered: – Card Not Present – eCommerce, MO/TO, and Recurring Payments • Targeted Industries and Products: ‒ Gift cards ‒ Funds transfers ‒ Electronics including phones, tablets, video game systems and software ‒ High-end and luxury goods ‒ Jewel
Slide 6: Why are we talking about CNP?
Why are we talking about CNP? $3.5T GLOBAL ECOMMERCE SALES WILL DOUBLE FROM 2015 TO 2019 $1.7T Challenge: Optimize authorization and fraud management practices to maximize the growth of ecommerce and digital payments Source: eMarketer July 2015, includes online and mobile ecommerce 6 | Strategies to
Slide 7: Card Not Present Retailers
Card Not Present Retailers eCommerce, MO/TO, and Continuity Merchants 7 | Strategies to Effectively Mitigate Card Not Present (CNP) Fraud | 17 November 2015 Visa Public
Slide 8: Card Not Present Fraud: Identifying Potential Red Flags
Card Not Present Fraud: Identifying Potential Red Flags • Transactions from “unusual” IP addresses – Some online retailers have received fraudulent transactions from a foreign country thousands of miles away • Shipping and billing addresses mismatch – In some cases, ship to and billing addresses are
Slide 9: Card Not Present Fraud: Addressing Red Flags
Card Not Present Fraud: Addressing Red Flags • Adopt a KYC “Know Your Customers” mentality and assess how customers access your website – Use “strong” and unique passwords with customers (e.g., letters, numbers, special characters, upper and lower cases) to prevent account takeover attacks – Analyze
Slide 10: Card Not Present Fraud: Addressing Red Flags (cont.)
Card Not Present Fraud: Addressing Red Flags (cont.) • Avoid lowering settings on fraud strategy tools – Many merchants that relax setting to maximize holiday sales were identified in Visa’s fraud / chargeback monitoring programs – Merchants should consider fine tuning the settings on their fraud to
Slide 11: Card Not Present Fraud: Addressing Red Flags (cont.)
Card Not Present Fraud: Addressing Red Flags (cont.) • It’s better to avoid a fraudulent transaction and related chargeback than try to manage it in the back office • Use the right set of tools for your environment and business line • In the United States, Card Verification Value 2 (CVV2) and Addres
Slide 12: Card Not Present: Minimizing Chargebacks
Card Not Present: Minimizing Chargebacks • Will there be product shortages due to increased sales resulting in fulfillment related chargebacks? • Are the refund and return policies clearly disclosed, prominently displayed to the consumer, and easy to understand? Are they well executed? – Some mercha
Slide 13: Minimizing Chargebacks for Continuity Merchants
Card Not Present: Minimizing Chargebacks for Continuity Merchants… • Memberships and subscriptions are common holiday purchases • Acquirers should review their continuity merchants (e.g. memberships, subscriptions, etc.) business practices: – Are there clear and easy to understand terms and conditio
Slide 14: Effective Fraud Management Requires a Layered Security Strategy
Effective Fraud Management Requires a Layered Security Strategy Visa Tools Risk Scoring Databases (VbV, CVV2, Systems / Negative Pattern Professional AVS) Neural & Detection Fraud Expertise Networks/ Positive Engines Detection VTA Lists Rules Utilize existing card Use artificial Leverage Use engines
Slide 15: Fraud Detection Engines Key Components
Fraud Detection Engines Key Components 1. IP Tracking: This has many purposes, for example - not accepting sales from similar IP’s without reviewing the details, geo tracking for known “High Risk” hot spots. 2. Velocity Checking: Account number, IP Address, number of transactions etc. 3. BIN and BIN
Slide 16: Fraud Detection Engines Key Components (cont.)
Fraud Detection Engines Key Components (cont.) 6. Shipping: Ship to billing address. Variances should be scrutinized and further risk assessment made. 7. Email confirmation: Consider cancelling or refunding orders if e-mail verification bounces back. 8. Email Domain verifications: Ensure domains and
Slide 17: CyberSource Risk Management Solutions
CyberSource Risk Management Solutions Cory Siddens Sr. Director Product Management
Slide 18: Fraud management process
Fraud management process Automated Decision Mobile Accept Fraud Web Orders Transaction Business Rules History and Tests Reject Call Center Kiosk Manual Review POS Tuning and Analytics 18 | CyberSource Decision Manager | Summer 2015
Slide 19: CyberSource Decision Manager
CyberSource Decision Manager 1 2 3 4 Detection Rules Case Management Tuning Radar Engine System and Analytics • Proven risk model • Flexible rule building • One console with all • Real-time reporting • Detection insights from necessary data sources suite: financial, • Change rules instantly to make
Slide 20: More data improves accuracy
3rd-party data sources Transaction history Popular • Purchase velocity detection tests • Shipping method data • Bad customer list • Phone data • Good customer list • Address validation • Device fingerprint • Packet signature inspection IP geolocation data More data improves Service checks • Card # /
Slide 21: Improved accuracy increases automation
Improved accuracy increases automation Increases fraud pattern visibility 200X Tuning Business And rules Analytics Compares with insights 68B 260 VTA annual Visa and CyberSource real-time Merchant from over… transactions worldwide correlation tests Risk Score *Source: CyberSource North America Merch
Slide 22: Cumulative chargeback percentage rate
Cumulative chargeback percentage rate 100% 90% Higher bound (+1 standard deviation) 80% 70% 60% Average 3 months to receive 90% of 50% truth data 40% Lower bound (-1 standard deviation) 30% 20% 10% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Weeks (Since original transact
Slide 23: Strategy tuning
Strategy tuning Current state 3-month lag time Impact unknown Sequential Results Impact? Impact? Current New Next strategy strategy strategy 23 | CyberSource Decision Manager | Summer 2015
Slide 24: Decision Manager Replay
Decision Manager Replay Strategy Test A Strategy Test B Strategy Test C Strategy Test D Transaction history including all data Strategy Test n... elements from order session Activate best 24 | CyberSource Decision Manager | Summer 2015
Slide 25: Allows comparing before/after and triggered rules
Allows comparing before/after and triggered rules Before Replay Current strategy After Replay New Accept’ strategy Review’ Reject’ Show in parenthesis % Change (before vs. after) % of total before Transaction amount (US$) Change in transaction count % of total after Fraud count Note: This data is il
Slide 26: Account Takeover Protection
Account Takeover Protection • Keep customer accounts safe and protect against the fraudulent use of account- on-file payments • Identify fraud at account creation and login, and monitor for suspicious account changes • Decision to Accept, Reject or Challenge • Enables you to monitor activity to enha
Slide 27: CyberSource Decision Manager helps bring balance to your business
CyberSource Decision Manager helps bring balance to your business… Services 3-D Payment Account Rules-Based Fraud Takeover Payer Protection Protection Authentication Tools Case management Core rules engine Tuning and analytics Decision Manager Platform 27 | CyberSource Decision Manager | Summer 2015
Slide 28: Profit Optimization
…helping your business gain efficiencies and optimize profits Profit Optimization Minimize operational costs 28 | CyberSource Decision Manager | Summer 2015
Slide 29: How to get started
How to get started • Ask if your organization is optimized • Are you operating with a balanced view • What’s your fraud pattern visibility • Are you reducing friction • What’s your tuning frequency • How accurate is your forecasting
Slide 30: To Learn More
To Learn More Visit cybersource.com/products/fraud_management/ 30 | CyberSource Decision Manager | Summer 2015
Slide 31: Visa E-Commerce Merchants' Guide to Risk Management
Visa E-Commerce Merchants’ Guide to Risk Management Merchant Resource Library https://usa.visa.com/support/merchant/li brary.html Direct link https://usa.visa.com/dam/VCOM/downlo ad/merchants/visa-risk-management- guide-ecommerce.pdf 31 | Strategies to Effectively Mitigate Card Not Present (CNP) Fra
Slide 32: Questions?
Questions? 32 | Strategies to Effectively Mitigate Card Not Present (CNP) Fraud | 17 November 2015 Visa Public