PSD2 Transaction Risk Analysis

PSD2 Transaction Risk Analysis

Adaptive analytics and machine learning to help protect you from fraud and prepare for PSD2.

Solution Details

PSD2 requires strong customer authentication when payments are initiated, however there are exemptions from strong customer authentication for those who can keep their fraud levels under specified reference fraud rates. This allows payments under €500 to be secured using transaction risk analysis. The lower a PSP can keep their fraud rates, the more they will be able to use transaction risk analysis to secure payments. Using transaction risk analysis will help the PSP to lower friction in the customer payment process, improve customer service and keep the cost of securing payments lower.

Managing payment security for PSD2 has implications for consumers who are using banking and card services to make payments. When strong customer authentication needs to be used or when authentication fails, banks need to communicate effectively with their customers. This means providing customers with the information and instruction they need at the appropriate time using the right channel. Payment service providers that don’t manage the customer communications process well could lose customers as a result.

The FICO® Falcon® platform performs transaction risk analysis to secure payments that do not need strong customer authentication, it is proven to do this at the volumes and real-time speeds required to effectively manage fraud for PSD2.

By using a combination of advanced analytics, including supervised and unsupervised machine learning you can detect and stop fraud more quickly and before it rises fraud basis points to a level that will force you to perform strong customer authentication more frequently.

By using our expertise and fraud analytics we can help you to drive fraud rates down to below the designated bands that force strong customer authentication, this in turn means fewer interrupted customer transactions and lower overall authentication costs.

FICO has developed an integrated approach to managing fraud for PSD2, incorporating rules and profiles based on PSD2-specific parameters with innovative machine learning techniques. This allows your fraud operations to rapidly adapt to emerging fraud trends. Information is fed back into the models so they are constantly developing to better support you. FICO® Customer Communications Services is integrated with the FICO® Falcon® Platform to provide two-way communication with customers. This keeps them informed and provides information back from them, that can, in turn, be used to enhance fraud detection. Models can be further enhanced with data shared with other PSPs in our fraud consortia so that your fraud detection is enhanced with more relevant data.

PSD2

To help you to comply with PSD2, continue to adapt to evolving fraud scenarios and make the most of the opportunities that open banking brings, we offer a range of services, including:

Prepare with expert advisors

  • Get advice you can trust from informed and confident advisors.
  • Understand in detail why fraud is happening in your accounts.
  • Reduce fraud to the best possible levels for your operations, with specific and detailed information about what you need to do.
  • Understand when and how you can balance Transaction Risk Analysis with Strong Customer Authentication to deliver the best results for you.
  • Analyze your customers’ journey for PSD2 so that you are ready to implement appropriate communication strategies.

Protect with a proven fraud detection solution

  • Be confident in your solution with software that already protects 60% of the world’s cards from fraud.
  • Detect and manage fraud in mass volumes and in real time — our customers can process 9,000 transactions per second.
  • Improve accuracy of fraud detection with better access to relevant data. We can incorporate data from multiple sources and help you share fraud insight through our consortium.
  • Detect more fraud faster with expertly built fraud models designed for PSPs.
  • Provide customers with the communications and instructions they need, when they need them, using the most appropriate channel.

Adapt and futureproof with machine learning

  • Adapt quickly to emerging threats and the new data landscape, with our proven machine learning capabilities.
  • Reduce the need to manually write and change fraud models. Our machine learning capabilities will adapt them on the fly — and they’re specially designed for your industry.
  • Be confident your solution won’t date — our machine learning pedigree started 25 years ago and today we’re innovating more than ever. We have over 42 fraud related AI patents awarded or pending in just the past five years.

 

Resources

PSD2 Glossary

Payment Services Directive 2, or PSD2 as its better known, involves a lot of acronyms and new terminology. These terms can be both difficult to understand and easy to forget! To help you keep all the terms and their definitions to hand we’...

PSD2 and Transaction Risk Analysis: Why It’s Important to You

European politicians have not failed to notice that levels of fraud have been increasing despite industry initiatives to stop its growth. The second Payment Services Directive (PSD2) comes into force in January 2018 and places the accounta...

Getting Your Fraud Operations Ready for PSD2

One of the key aims of PSD2 is tackling fraud — particularly fraud related to remote payments; for example, those made online. Card-not-present fraud has plagued the industry since the introduction of chip and PIN caused fraudsters to swit...

PSD2 — Is Machine Learning More Important in the New Payments Ecosystem?

The second Payment Services Directive, better known as PSD2, is set to change the payments landscape, and Payment Service Providers (PSPs) will have to change with it. Those that implement PSD2 well are likely to retain existing customers ...