Developed by Kount in conjunction with The Fraud Practice, the State of Payment Processing & Fraud: 2018 Inaugural Survey & Report reveals the results of a survey taken by hundreds (approximately 15%) of processors, acquirers, issuers, gateways, and payment facilitators within the payment processor community. The survey was aimed at understanding their priorities and the value they place on payment processing and fraud analysis within their companies as well as where the processor market is going in the next couple of years.
The study shows that there is an increased awareness among payment processors about the necessity of preventing fraud and this is reflected in the shift of many payment processors to offer value-added services including eliminating false positives, stable order approval processes, and sales conversion rates. Additionally, the survey shows that payment processors will continue to increase support for business reporting and analytics, fraud technology tools, velocity checks, cross-border payments, authorization declines, fraud scoring, and mobile and alternative payment types.
Growth of Value-Added Services
The payments industry is very different in 2018 than it was twenty, ten or even five years ago. Being able to facilitate payments in the eCommerce (100 percent of survey respondents) and mobile (94 percent of respondents) channels is a must, and almost all organizations, 97 percent, are offering one or more types of value-added services. One of the primary purposes of the State of Payment Processing & Fraud survey was to understand what payment industry organizations are offering today in terms of value-added services, and how each benefit both the payment provider and their merchant clients.
Just three percent of payment industry companies say they are not offering value-added services today, compared to more than half of organizations that offer four or more additional payment or transaction related services. Omitting the few organizations that don’t support value-added services, 87 percent offer two or more and nearly one-third offer five or more.
More than half of respondents offer fraud technology tools as a value-added service, while 55 percent support mobile and alternative payments and nearly two-thirds of payment industry organizations offer their merchant clients reporting and business analytics. Nearly half of organizations provide integrated risk management rules or fraud scoring, while 45 percent offer cross-border payment processing.
Challenges of Fraud & Risk Management
Electronic payments are a significant and still growing part of the overall payments industry, making risk management a dynamic environment as well. All organizations surveyed are supporting at least one form of electronic payment, and therefore all should be concerned with fraud and risk management. Another major focus of the State of Payment Processing & Fraud Survey and the 2018 inaugural report is to understand fraud and risk management from the payment industry stakeholder’s perspective. Specifically, what challenges the payment industry faces in terms of fraud – directly and with their merchant clients – as well as how fraud and risk management services are offered or supported by these organizations as value-added services.
Simply put, fraud mitigation and risk management are challenges for nearly all organizations operating in the CNP channel, and 100 percent of respondents indicated that fraud prevention is top of mind and a critical concern for their organization. Payment industry participants were asked to list each of the specific challenges facing their organization in terms of fraud with more than half citing CNP channel fraud as difficult. Approximately one-third of payment processors are concerned with friendly fraud and how it impacts their merchant clients, while about one-in-four consider account takeover a challenge to their organization. About 64 percent of payment industry organizations surveyed listed two or more challenges they face related to fraud and risk management, and about half cited three or more specific fraud challenges.
If you are in the payment processing or fraud prevention industry, you will gain solid insights from reading this report. You will not only learn more about the value-added services that payment processors are adopting, but you will learn some of the strategies that are being developed and used to attract and retain merchant clients.
Keeping up with the market is critical to advancement and this 41-page report by Kount and The Fraud Practice will show you market trends for the types of payments being accepted and the path forward for investments over the next couple of years. This whitepaper by Kount and The Fraud Practice will give you deeper insight into fraud prevention and secure payment processing measures.