Recently, PYMNTS.com posted an interview with Retail Decisions entitled Fraudsters Take No Prisoners But Retail Decisions Can Strengthen Your Strategy for Prevention.
The entirety of the interview is just under 10 minutes, and I would encourage anyone who has interest in this topic to set aside the brief time required to listen.
In this interview, when asked about the delivery of fraud prevention as a service vs. an in-house solution, Carl Clump, CEO of ReD, gave a list of benefits to leveraging a service provider such as ReD (these are paraphrased):
- Retailers are not fraud experts, and should be spending their time focused on being the best possible retailer.
- Fraud prevention, when deployed only for yourself as an internal solution, only enables you to see trends from your own transactions vs. on a global basis and with pooled data from worldwide retailers across multiple verticals.
Increasingly, tier two and tier three retailers are facing the same challenges, in respect to fraud, as larger retailers. In fact, there is some argument that they represent a “better” target for fraudsters as a result of not (typically) having fraud solutions in place already. Quite bluntly, these retailers simply cannot afford the expense of building/deploying an in-house solution (based on their volumes) and require the capability of fraud prevention as a service.
As you may be aware, IP Commerce and Retail Decisions announced a relationship in March, 2011. In this release, entitled IP Commerce Strikes a Distribution Agreement with ReD, Peter Osberg, Sr. Vice President, Business Development & Marketing for IP Commerce, said the following:
“Many of the acquirers and processors, who leverage our platform to recruit and integrate software companies to their services, have been requesting risk services to be available for their merchants. Our software development community needed a risk solution to address a growing need for enhanced fraud prevention in the payments workflow. We chose ReD because of their leading expertise and unique product – which is second to none.”
Carl Clump was quoted as saying:
“This is an exciting development for us and significant news for tier two and tier three online retailers who are constantly under threat from fraud. With dozens of software companies joining IP Commerce each week, ReD will reach a vast new audience and bring its services to the wider retail market – rejecting more fraudsters and substantially benefitting the payments community.”
The last bit of this quote is particularly compelling given the interview with the PYMNTS.com team.
Enabling these retailers to participate in a best-in-class fraud solution, alongside the largest retailers, not only benefits the lower tiers of retailers…but ensures there is a larger base of information from which decisions can be made for the industry as whole.
Fraud prevention, as a value-added service, is wildly valuable to the software company building acceptance solutions for smaller eCommerce merchants…and, it is available through the same set of open payment APIs leveraged to build the initial payments integration.