Falk Schubert, PAY.ON: "OneClickSafe - a fraud prevention tool which enables merchants to foster and maintain the trust of shoppers"

How would you place OneClickSafe in the context of online fraud prevention? It would be interesting if you could tell us more about this product. What are its key features and what sets it apart from other products that are currently available on the market?

Falk Schubert: At PAY.ON we noticed a demand in the market for a risk configuration tool that is easily understandable, while simplifying the selection of risk checks. The idea of a do-it-yourself fraud prevention tool was therefore born. OneClickSafe is based on PAY.ON’s recent market data and experience, and analysis over the past ten years in the field of fraud prevention on our platform. When we put together a summary of the results, this led to the development of OneClickSafe as a product. Our risk solution does all the work for merchants in terms of realising and integrating a highly efficient protective tool against fraud.

OneClickSafe is available in three versions: ‘Smart’, ‘Advanced’ and ‘Excellent’. In addition to the security barriers automatically included, the ‘Smart’ setting offers a global blacklist for merchant accounts, a plausibility check by BIN country code (country IP) and a duplicate check. ‘Advanced’ version additionally adds the components of a real-time and anonymous proxy check and account velocity check to identify and combat fraudulent shopper activity. In addition to the functions offered by ‘Smart’ and ‘Advanced’ packages, the ‘Excellent’ package includes a fraud memory cache with fraud pattern recognition, a 24-hour blacklist check and 3D Secure for credit card processing. If any further adjustments are necessary, users can make individual calibrations using the filters contained in each package. This way, the additional internal and external risk checks can be carried out.

With just a click of the mouse, merchants have an exemplary protection tool for credit card payments, SEPA transfers and payments with alternative payment methods. The risk checks minimise chargeback fees and unauthorised transactions while helping to increase conversion rates.

OneClickSafe thus enables merchants to fight fraud effectively without being experts in risk.

Could you please share with our readers some insights into the concepts of “risk configuration” and “simplifying risk selection”?

Falk Schubert: The current state of technology makes risk configuration a major challenge for merchants, costing them considerable time, money and resources. Most merchants rely on the expertise of their payment service providers or an external fraud prevention solution provider, who will control the risk for them. We wanted to offer a product which simplifies risk check selection to the extent, where a solid set of risk checks can be conducted by the merchant himself.

By limiting the maximum number of applied risk checks to the most efficient number, merchants are able to fully grasp the extent of the risk concerned. They can be sure that the checks have been proven effective over the last ten years. Thus, they can be sure to combat the fraudulent use of credit cards, debit cards and direct debits. This way, OneClickSafe simplifies fraud prevention and enables merchants to participate in the risk selection process.

OneClickSafe fits PAY.ON’s approach of simplifying payments in general. A similar approach can be seen in solutions such as COPYandPAY and our active payment method selection. 

Why should companies activate OneClickSafe if they don’t have a chargeback problem and only occasionally experience fraud? What is the impact on merchant conversion rates?

Falk Schubert: Companies should activate OneClickSafe because the average cost of chargebacks and fraud – about 25 cent per transaction - exceeds the cost of activating the security net OneClickSafe by up to 400% per transaction. It is therefore important to make the costs associated with fraudulent orders and chargebacks transparent to merchants.

The conversion rate is the main reason why we split our solution into three packages. Merchants are free to decide how rigorous their fraud prevention should be. And it will affect their conversion rate – but in a positive way, because it filters out the bad transactions, and this increases profits.

We believe that the best proof of a product’s effectiveness is to test it under live conditions. We therefore allow our clients to activate a ‘what if?’ mode to monitor the live transaction processing of their merchants during a trial period. In addition, we provide them with a monthly report of which transactions would have been declined if OneClickSafe had been used. This allows a comparison between our results and the actual fraud experienced. We also visualise the difference between actual and potential revenue and mitigate the risk of false positives.

What are the biggest challenges with respect to payment security for retailers and customers today, and how does OneClickSafe address these?

Falk Schubert: The media is full of stories about an increase in groups that conduct fraud on an extremely professional level. It is the responsibility of the industry to offer further information on this topic and to increase the general level of awareness, not at least because such news reflects negatively on all of us.

OneClickSafe is an important aspect of the PSP’s overall strategy to enable merchants to foster and maintain the trust of shoppers with respect to online payment solutions and to keep on fighting fraud effectively.

For example, the ‘Smart’ package includes an account blacklist so that shoppers with a negative record among merchants of the same PSP are declined. Such a solution decreases the likelihood of repeated fraud by the same person using the same account details by 100%. A recent CyberSource study, dubbed 14th Annual Online Fraud Report, confirms that a negative list of high-risk accounts is deemed effective by the majority of merchants.

The ‘Advanced’ package includes GeoIP-based checks in real-time, such as an anonymous proxy check and a velocity check to enable the merchant to define exactly who is shopping, and to what extent. Many different aspects have to be taken into consideration in the fight against fraud, especially the shopper, the goods to be protected and the transaction itself.

Additional measures include storing shoppers’ card data in a fully PCI Level 1 compliant environment to protect the brand from large-scale theft of card information and the resulting loss in reputation. Platform providers need to provide state-of-the-art encrypted connections between merchant sites and the payment platform to ensure that man-in-the-middle attacks are impossible. It is important to work with certified and trusted partners; this is the basis for every successful long-term relationship in business.

Given that the number of reported online fraud complaints is booming, can advanced fraud prevention techniques counter increasing fraud and malware? Or does the industry need additional resources to tackle the technical complexity of payment fraud?

Falk Schubert: The implementation of advanced fraud techniques is essential. And it is important that merchants understand that specific requirements lead to situations where the involvement of external fraud prevention solution providers is inevitable. Merchants can and should expect their payment platform to meet their fundamental requirements in protecting their transactions. At PAY.ON, we implement advanced fraud prevention techniques to counter increasing fraud and malware. All of this can be accessed as a one-stop solution through our gateway, and their deployment usually entails no additional integration effort for the merchant.

PAY.ON and its clients have always accepted their responsibility and will continue to develop risk solutions. At the same time, PAY.ON is increasing its efforts to team up with fraud prevention solution partners aiming at making it easier and more efficient for merchants to protect their transactions the best they can.

You have been helping your customers prevent fraud globally in a broad range of business areas for over ten years. In your opinion, what is the best approach to ensure secure payments and online fraud prevention?

Falk Schubert: It has always been essential to identify potential fraud before it occurs. Merchants often lack the capacity to identify the fraud attempts themselves, so they need to rely on the experience and expertise of their PSP and PAY.ON as their payment solution provider. It is more beneficial for the merchant to outsource fraud to the payment gateway provider because the potential loss resulting from fraud is much higher than most merchants would believe.

Recent statistics show that fraud losses have actually decreased since 2007 and 2008, from 1.4% to 0.9%. However, looking at the overall increase in e-commerce only, we see a total volume of transactions processed worldwide at about USD 950 billion in 2012. This figure is set to reach between USD 2 to 4 trillion by 2016. Assuming a fraud loss of 1%, this means we could be looking at USD 20 to 40 billion of missing revenue in 2016. To further minimise the percentage of losses from fraud, merchants need to continue protecting their transactions by taking advantage of solutions such as OneClickSafe.

How does your company work with retailers and other organisations in terms of transforming their culture when it comes to online fraud?

Falk Schubert: PAY.ON provides a platform to exchange thoughts and ideas for merchants, payment service providers, fraud prevention solution partners and the payment method institutions, such as acquirers, wallet providers and banks. Their experience and market insights are crucial in the process of creating fraud prevention tools that work.

In addition, we host industry-specific conferences in collaboration with our expert partners. One example is Fraud Prevention Day 2014 on 24 February in Munich, with our fraud prevention solution partners including arvato infoscore, Cardinal Commerce and Retail Decisions, as well as representatives of the Merchant Risk Council.

Actions like these show that we are on the right path. We will continue to raise awareness of fraud as part of our daily work and help everybody understand the importance of fraud prevention while ensuring that businesses tackle the problem correctly so that shoppers are able to enjoy paying online in the knowledge that there is no safer way to transfer money.