5 Important Factors To Consider While Evaluating A Fraud Management Solution

ByDoreen

If your business has even a single revenue channel or workflow that goes through a digital channel, there are high chances of fraud and malicious third-party attacks. With so many enterprises and startups today using a fully digitised business model and with attackers becoming more sophisticated, the risk of cyberattacks has grown exponentially. Studies have shown that businesses around the world lose about 5% of their total gross revenue due to cyberattacks and fraud. This number is growing significantly with the increase in digital transformation.

What your business needs is a fraud management solution to help with fraud risk management. Fraud risk management is a process during which professionals assess the risk of fraud in a company. Once the risk is assessed, it is time to develop a fraud protection plan and solutions. These are designed to prevent fraudulent activities and mitigate disaster before any damage is done. Such solutions help in detecting and preventing fraudulent activity both within and outside the business infrastructure.

Factors to Consider While Choosing a Fraud Management Solution:

With tighter economic restraints today than ever before, even a small percentage of fraudulent loot can amount to significant amounts of money. If the issue is not addressed, fraudulent business losses can grow significantly, damage your brand image and result in exponentially increasing losses.   

Consider the following when choosing the right solution for your company: 

  1. Chargeback guarantee or scoring:

The first decision that you must take as a business stakeholder will be if you want a fraud management system with a chargeback guarantee or a scoring solution. This choice is affected by the level of control you wish to hold. Do you want only recommendations and want to make decisions on your own? It will mean you have greater control over your enterprise fraud management process, but you will require a greater level of expertise. You will also be liable for chargebacks in this case. The next option is to get a definite decision. This will shift the liability to the solution and provide more predictability and certainty. However, you will have less control over the management process.

  1. The power of networks:

Larger and globally-recognised merchants significantly impact the power of networks. Almost every business tends to choose well-known e-commerce merchants regardless of the industry or vertical. It means there’s a higher chance that this vendor has already interacted with your customer before through another merchant. 

  1. Vertical expertise:

A fraud management system provider that can ensure great performance in one domain or vertical is not necessarily accurate in another domain. Ensure that the vendor you choose understands the vertical you operate in. For instance, some vendors specialise in physical product businesses but maybe not in digital goods. A system provider specialising in hospitality might be a specialist in experiences but not in travel.

  1. Third party data enrichers:

We live in a data-driven world today. The more updated and accurate the data that a fraud solution takes into consideration while deciding, the greater its accuracy will be. Some fraud management vendors use external sources of data like email ID, address, mobile number or social media information of potential buyers to gather additional data and ensure higher accuracy.

  1. R&D team:

Creating accurate ML (machine learning) models is a complex role and needs a high level of talent, investment and effort. Additionally, your fraud management vendor should have a model that is vertical-specific to ensure greater accuracy. It also takes a dedicated team of data science engineers as well as fraud experts so that expertise can be achieved and improved upon.

  1. End-to-end solutions:

Having a wider product range can result in increased revenues, higher conversion rates, operational efficiency, and superior customer experience. While evaluating various fraud management solutions, consider both your short-term needs as well as long-term requirements.

  1. Flexibility:

Certain fraud prevention solutions can only take a merchant’s full order volume, while others only take a part of it and assist with the more risky or challenging segments. Ensuring a partner that provides greater flexibility will let you do more things your way. To grow your partnership, you must find ways to adjust and optimise your business along the way.

  1. Professionalism:

When it comes to fraud management services, you are starting a partnership, not buying a service. Your vendor’s responsiveness and professionalism should be key factors in understanding what your partnership will look like in the months and years to come. Make sure you are getting dedicated support teams as well as 24×7 customer service.

  1. Sustainable offers:

Certain vendors that provide a chargeback guarantee commit to meeting approval rates in the official agreement. Such a commitment is an advantage for you as the merchant since it helps you predict both approval rates and fraud costs.

Technology is a constantly-evolving domain. You cannot eliminate fraud threats, but with the right fraud management solution, you can mitigate your losses and minimise threats. Consider these nine factors to ensure your business is secure in the long run.

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