American Express is integrating its Enhanced Authorization fraud detection system with platforms operated by Accertify, Microsoft and Riskified.
The integrations allow the companies to share payment data at the time the transaction is taking place, said Tina Eide, senior vice president of global fraud risk at American Express.
"Digital data is so incredibly valuable, and we find that it works well for all types of online fraud," Eide said. "There is no specific type of fraud in which we see a gap or a hole, as we are finding the Enhanced Authorization data captures it all. Without it, there are some gaps, but with it we have closed them."
Amex is using application programming interfaces to link into Accertify’s Fraud and Abuse Protection Platform, Microsoft’s Dynamics 365 Fraud Protection and Riskified’s Fraud Management Platform. Accertify is a unit of Amex.
The integrations are an important boost for the Enhanced Authorization platform, considering retailers and e-commerce merchants have seen the cost of
With the API, the platform becomes part of the online fraud prevention products that merchants may already be using to protect their businesses.
Merchants have been able to provide extra data to Amex in the past by sending incremental information right in the ISO message along with the transaction data, or separately through the Enhanced Authorization API. Now, the merchants don't need to do anything if they are already providing that sort of information to a provider partnering with Amex.
"There are many data fields available, and you think about addresses and important numbers for the customer, but the merchant can also indicate how long the customer has been registered and information about past purchases," Eide said.
American Express e-commerce merchants can expect up to a 60% reduction in fraud through the more accurate authorization process, as well as increased approval rates, Eide said.
The online customer will not notice any change in their shopping experience, as the enhanced data capture occurs in the background during the transaction process.
Amex Enhanced Authorization, which launched in 2005, evolves as it adds data from merchants, said David Mattei, senior analyst with Aite Group.
"American Express is rather unique among the card brands in that it is both the issuing processor and acquiring processor," Mattei said. "Since they see all traffic from both perspectives, this allows them to combine all of that data to make a better and more informed authorization decision. Merchants have a rich set of data that issuers typically never see — data such as device data, IP address, phone numbers, email addresses and others."
By combining a richer set of e-commerce data to the fraud decision, Amex addresses multiple goals, Mattei said. "One is to approve more e-commerce orders, which have high decline rates compared to card-present transactions," he said. "Two is it reduces false positives — a good transaction that is incorrectly declined as fraudulent. Three is to reduce overall fraud."
Such a combination comes "a step closer to perfection — approving all good transactions and stopping all fraudulent transactions," Mattei said.
Partners on the front lines with merchants see an immediate benefit when more data is shared.
Effective collaboration across the payment ecosystem is imperative to enable the e-commerce revolution, said Matt Lifshotz, head of bank and issuer partnerships at Riskified.
"Our partnership with American Express — and the Enhanced Authorization partnership we’re announcing today — is a major step forward that will have a real impact on how transactions are evaluated and what customers experience," Lifshotz said in a press release.
Additional integrations are planned in the coming months.
"We work with merchants of all sizes globally to get the data," Eide said. "From a partner perspective, we are looking to work with any partner that works directly with merchants."
The risk management team at American Express is "up every morning trying to figure out, from one case, what we can learn and what we can develop, or what's a new variable or a new modeling technique," Eide added. "It's a very exciting space."
