Number 4. Fraud is only one of many risks you have to be concerned with.
Most Enterprise Fraud Systems are sold as a do-it-all swiss army knife that started life as an issuing fraud system. And besides fraud, there are many other risks that you have to be concerned about. Here is a quick checklist of the most important acquiring risk capabilities you will need for your shop:
- Authentication (more specifically, risk based authentication)
- Unified real-time fraud controls (POS, MPOS, eCommerce, Kiosk, eMOTO, MOTO)
- Chargeback prediction
- Risk based pricing
- eMarketplace risk management
- Merchant risk management controls
- Real-time origination platform with fraudulent application
- AML controls
Number 3. You’re buying a “budget option” EFM because of tightening budgets.
Just when you think you are getting the Mercedes Benz of the risk world, the truth of the matter is what you’ve really gotten is the bottom of the barrel “rental-spec econo” version that really doesn’t deal with today’s real-world issues.
Big name EFM providers tend to make everything optional. And optional shall they remain as acquiring banks begin to tighten their wallets.
Number 2. You’re not using risk management as a business enabler.
Most acquirers in Asia miss this point completely. If there’s one thing you need to get right, it’s risk. One good example would be Paypal. Paypal started life as Confinity which was essentially an ePayments risk company. Other folks like Square and Stripe could also arguably credit some of their success to extraordinary risk controls – particularly in areas of eKYC.
In tomorrow’s commerce, the ability to reduce friction by using risk based authentication will certainly be a requirement for your new merchants. Some may even list the availability of a gateway agnostic fraud detection and eMarketplace risk management tool as a pre-requisite.
Number 1. Origination. Origination. Origination.
Your acquiring business and customer needs are changing. Fast. Instant gratification is the name of the game.
Most acquiring banks seem to think that their biggest competitor would be the bank next door. With the mindset (and people) that scream “I know acquiring better the other guy”, you’ll probably not see the real competition heading your way.
Your biggest challengers from now on would be from the technology world and to certain extent, acquirers who have embraced technology. Your biggest threat is on how they are able to on-board merchants quickly.
If you’re taking 14 days or longer to on-board your merchants, you’ve got to start re-thinking your risk strategy. EFM is certainly not the solution to your current challenges.