Risk Requirements in Payments: An Overview of End-Point Fraud, Commercial Risk and Legal Compliance

If you are considering enabling payments through your SaaS platform, it’s important to be aware of the three main elements/types of fraud protection and risk management you will need to provide for your merchants.

With any online business, there are inherent risks involved. The risk environment in online business is framed by End-point Fraud, Commercial risk and Legal Compliance. Providing solutions and preventative strategies for these is an essential part of being able to provide a positive payments experience for your clients.

Trust is core to building a mutually successful, long-term relationship between you and your merchants. Our technology and expertise not only gives you the reliable, efficient platform for your customers’ needs to grow their business, we help take responsibility for risks and offer protection to you and your Merchants along this journey.

End-point Fraud

End-point fraud is a genuine concern for merchants. Your Merchants rely on your platform to have business rules and processes that minimize fraud and resultant chargebacks. Industry surveys* indicate that more than 60% of platforms cite fraud and chargebacks as an operational pain point with only one third regarding their platforms as effective in this area. 

Different requirements and processes for your Merchants apply at different stages of a customers’ lifecycle. For example, customer onboarding and “first-time checkout” customers require a deeper verification process than regular customers with a successful transaction history. Similarly, customers who suddenly alter the value of their historical transaction pattern would attract another set of actions designed to protect your Merchant from potential fraudulent behavior. Our experience in the payment space ensures you secure the balance between protection of your Merchants and rejection of their customers. We understand the costs of turning away good customers is incalculable. A recent survey** showed that 1 in 4 customers have abandoned a purchase because of a false decline.

Having the correct authentication and security processes  early in the payment process can shift responsibility of fraud away from you and your Merchants. We help implement these steps and insulate you against fraudulent behavior.   

* 2019 Payments 2022 survey

** 451 Research’s Voice of the Connected User Landscape: Connected Customer Survey, 2019

Commercial Risk

Commercial risk to your business can be significant when it comes to the migration of specific verticals to a new payment solution on your platform.  Migration speed, accuracy and security of data are vital in delivering a sublime migration experience for your Merchants. 

We seamlessly manage your portfolio, migrating your Merchants’ and their customers’ data quickly, easily and safely through our REST API integration.

Legal Compliance

By inference, the risk attached to legal compliance is not meeting your obligations in the payment processing space. Any organization that facilitates financial transactions on behalf of individuals or entities must put thorough processes in place to ensure they are not dealing with Merchants who expose them to regulatory or reputational risks. 

These checks are typically focused on anti-money laundering (AML), counter-terrorism financing (CTF), Know Your Customer (KYC) regulations and sanctions compliance. Other elements such as Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) are becoming standard requirements of the regulation space. As localized and global reporting requirements of compliance continue to expand, so too, will the cost to platforms of managing this part of their business.  

Recently surveyed* SaaS companies suggested that only 20% see themselves as handling these issues effectively, adding that the number of vendor relationships required to satisfy the ever-increasing regulations in this space represented a significant cost of sales to their business.

We absorb the majority of risk, infrastructure buildout, and complexity that comes with managing payment facilitation. Our solution gives you more freedom to focus on your customers and grow your business.

* 2019 Payments 2022 survey

What is your fraud and risk management strategy, and are you using an integrated partner to provide your merchants with a complete solution? Let us know by telling us on our LinkedIn.