Fraud prevention: Create a winning strategy

Posted by Caroline Bagby | May 14, 2019 | Payments management

Improve fraud prevention with Pazien

Pazien’s access to Visa TC40 and Mastercard SAFE data gives you the analytics you need to create a solid fraud prevention strategy.

Unlike the standard TC40 and SAFE reports, which simply outline transaction-level details, Pazien provides insights into fraud claims. You’re given data on regions, currencies, MIDs, reason codes, and more, that are inflicting the highest instances of fraud on your business.

Knowing the holes in your payment operations can help you make decisions on whether to implement fraud or risk tools, to enable authentication methods in certain regions, or to route transactions more effectively.

The black hole of fraud data

TC40 and SAFE reports  

Visa and Mastercard capture all fraud related claims for their networks. Here’s how it works:

  1. A consumer reports an unrecognized transaction as fraudulent to their bank.
  2. The bank analyzes the transaction to determine if the transaction was legitimate, or if fraud occurred.
  3. If the bank determines fraud occurred, the bank submits a report of fraud to Visa or Mastercard, called the TC40 message for Visa and SAFE data for Mastercard.
  4. Visa creates a TC40 report and Mastercard creates a SAFE report, each detailing fraud-related transactions for your business. It’s important to note that Visa requires issuers to send this data on a daily basis, whereas Mastercard only requires fraud claims on a monthly basis.
  5. Visa TC40 and Mastercard SAFE reports are delivered to your acquirer. Visa (TC40) sends data on a daily basis and Mastercard (SAFE) sends data on a varied basis, depending on the processor setup.

Fraud claims vs. chargebacks

Many people assume that all fraud claims turn into chargebacks, but that’s not always the case. Since chargebacks come at a cost to issuing banks, issuers can choose to refund fraud claims without advancing the transaction to a chargeback. This is especially common with lower ticket items (e.g. $20). The bank is not obligated to let you know when they refund claims, yet the fraud claim still counts toward your overall fraud rateassessed by Visa and Mastercard.

Fraud can come back to bite you

Without TC40 or SAFE data, it’s incredibly difficult to know if fraud claims are building up against you. There are a couple of ways fraud claims can come back to bite you:

  1. You receive Visa RIS or Mastercard SAFE penalties if your fraud rates pass their allowable thresholds. Fraud penalties range from fines, to monitoring programs, to getting shut down by Visa or Mastercard. It’s very difficult to get out of monitoring programs once entered in.
  2. If an issuer gets consistent fraud claims against your business, the issuer may begin to decline transactions for your business. These declines can be difficult to identify as the issuer will often append a generic reason code. Instant declines tarnish your brand reputation by turning away legitimate customers, even though customers have sufficient funds to buy your goods or services.

You may not receive fraud reports

TC40 and SAFE reports are only available to you at the discretion of the acquirer or processor. These files tend to be very large and expensive as Visa and Mastercard don’t split the data by merchant. The networks simply send a fraud transaction dump, which makes it difficult for the acquirer to parse and distribute the report to you on a regular basis.

Acting on individual fraud claims can be costly

If you can get your hands on your TC40 or SAFE reports, your instinct may be to assess fraud claims and instantly issue refunds to consumers to avoid a possible chargeback. However, this isn’t a long-term or reliable fix for a few reasons:

  1. Even if you issue a refund, the consumer can still file a chargeback due to seeing an unrecognized transaction on their card statement. This forces you to represent. While you may win that chargeback, it still costs your business to represent.
  2. More often than not, the chargeback occurs concurrently with the issuance of a refund. You could end up paying double for that transaction (chargeback and refund), plus the cost of processing a chargeback.
  3. Fraud transactions don’t always turn into chargebacks, especially for lower priced goods or services. As mentioned before, the issuer may refund the transaction without escalating it to a chargeback. Therefore, a customer would receive a refund from you and from the bank.
  4. Issuing refunds doesn’t stop the TC40 or SAFE claim from existing. That fraud claim still counts toward your overall fraud rate in the eyes of Visa and Mastercard.
  5. If your chargeback strategy revolves around chasing fraud claims, you neglect to fight and prevent other costly chargebacks (e.g. goods not received, customer dissatisfaction, duplicate processing errors).

Be proactive, not reactive

Pazien fetches Visa TC40 and Mastercard SAFE fraud data and breaks transactions down into analytical insights. This data allows you to understand the roots of fraud and identify trends in what’s causing fraud. Understanding this information allows you to make cost decreasing, and revenue increasing decisions.

As you refine your fraud prevention strategies, Pazien enables you to quantify any changes you make. You can do this by tracking fraud-related declines (stopping fraud before it becomes a sale), and by doing a trend analysis to see how chargebacks change over time.

The best fraud strategies come down to stopping fraud at the source and Pazien data can help you do that.


To gain access to Pazien’s fraud data, reach out to your Pazien representative, or email hello@pazien.com.

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