Credit card fraud is a threat to your business. If you don't get paid for your goods, you incur multiple losses. E-Commerce has become a playground for organized crime and their illegal activities. Therefore, tools for fraud prevention are a must for each and every online merchant.

Pago Fraud Screening is the ideal security service for efficient protection against credit card fraud.

The principle of Pago Fraud Screening

Pago Fraud Screening uses the proven screening system ebitGuard from Retail Decisions as well as the international address verification process (AVS) and card number verification process (CVV2/CVC2). This offers the online merchant the ideal fraud prevention service, ensuring a high level of security without unnecessary turnover loss.

Pago Fraud Screening responds within seconds, giving the merchant a firm recommendation for each credit card transaction, making three distinct responses:

ACCEPT, DENY or CHALLENGE.

All ACCEPT transactions can be processed without hesitation; DENY transactions should rather be rejected. Transactions which are marked as CHALLENGE should be rechecked separately by the merchant, to decide on acceptance or rejection. This clear, three-stage assessment system helps you to differentiate quickly between fraudulent and clean credit card transactions.

You can minimise your chargeback rate and optimise your payment processing costs with Pago Fraud Screening to ensure your everyday online selling success.

Your benefits:

	Completely embedded and integrated into the Pago platform, Pago Fraud Screening offers you a clear and firm recommendation for each individual credit card transaction.
	You decide for yourself whether to accept or decline the credit card transaction.
	You can depend on our practically proven scoring methods and on the expertise of experienced risk analysts.
	In this way you can reduce your chargeback rate to a fraction of the current figure, as well as optimising payment processing costs, thereby giving you a decisive competitive advantage in your daily online business.

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Pago Fraud Screening FAQs

1. General questions
2. Questions concerning credit card fraud
3. Questions concerning technology and methods
4. Questions concerning implementation
5. Questions concerning cost and turnover

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General questions

1.1 What is Pago Fraud Screening?

Pago Fraud Screening is a service for the detection and prevention of fraudulent payments in E-Commerce, i.e. where the credit card is not physically present and the customer only transmits credit card details.

Because of the anonymity surrounding the buyer, the risk of fraud in such transactions is very high. It is therefore important that merchants implement a fraud prevention service.

1.2 Who can implement Pago Fraud Screening?

Any merchant or provider, offering his products or services in a so-called “card-not-present” scenario (refer to 2.1) should implement Pago Fraud Screening for fraud prevention.

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Questions concerning credit card fraud2.1 What is “card-not-present”?

In traditional bricks-and-mortar shops, the customer presents his credit card on payment to the merchant. The merchant can then check the card and, if need be, also the identity of the customer.

However, in E-Commerce this is not possible. The customer merely transmits his personal and card details over the internet for payment. The merchant is not able to confirm that the details transmitted really correspond to the identity of that person. This “card-not-present” (CNP) domain therefore describes purchase transactions where the credit card is not physically presented to the merchant, and the information details are only transmitted to him by the customer.

2.2 What exactly is a fraud attempt in a “card-not-present” transaction?

We can generally assume attempted fraud when a customer uses a credit card for payment and whereby he is neither the cardholder nor authorized by the cardholder to use that card. The customer is, of course, trying to obtain the goods without paying for them. Instead, the transaction is being debited to a credit card which the customer is not authorized to use.

Apart from individuals, the CNP domain is being increasingly targeted by organized criminal groups, operating internationally, using stolen credit card details.

2.3 What are the repercussions of successful fraud attempts for me, the merchant?

Very simply: The goods are gone, without being paid for. In addition to this the online merchant has to bear the costs for the chargebacks.

2.4 What is a chargeback and how does it occur?

If a cardholder finds an unauthorized payment transaction on his credit card statement, he will raise an objection. If this objection is accepted by the credit card organisation, the merchant concerned will be debited with the corresponding amount. This reverse transaction is called a “chargeback”. Every chargeback incurs further not insignificant costs. Apart from these costs, the merchant can also endanger his overall status which allows him to accept credit card payments.

2.5 What is a standard industry model?

Based on two decades of experience in the field of fraud prevention, we have developed seven standard industry models which, in effect, cover all the known internet business models. These models have been tested a million times over and provide optimised results because they cater for all the typical fraud patterns encountered in these industries.

If Pago Fraud Screening does not include an industry model which suits your specific needs, we can develop a special one for you. If you have a suitably high transaction volume and a sufficiently successful transaction history (based on successful sales transactions) Pago can offer you a client-specific solution at a fixed price.

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Questions concerning technology and methods

3.1 Do I need additional information from my customers when using Pago Fraud Screening?

The data you collect for a transaction are usually also sufficient for the implementation of Pago Fraud Screening. Should you be able to provide additional information – e.g. the IP address of the customer – this will, of course, greatly improve the quality of the assessment.

3.2 How are the transactions evaluated?

The assessment is carried out in five parallel stages:

	The credit card details are checked with negative or hot lists. These lists are compiled by the credit card organisations and merchant cooperatives, as well as by the individual merchant himself.
	Using neural network technology, behaviour patterns surrounding the given credit card are analysed – e.g. so-called “velocity checks” determine how often a card has been used within a certain short period. Also, cases where several different names, addresses and email addresses have been used with a single card are also evaluated.
	On top of this, the rules and guidelines developed for the specific industry model are applied. These are designed to detect known fraud patterns and behaviour based on historical and chargeback data.

3.3 Can I use the results from Pago Fraud Screening directly?

Yes, the result is delivered to you as a clear recommendation, in the form of three categories:

	ACCEPT (=the transaction can be carried out)
	DENY (=reject the transaction)
	CHALLENGE (= recheck the transaction).

This means that you can act immediately on ACCEPT and DENY recommendations. The CHALLENGE recommendation implies that the customer’s identity should be manually rechecked or additionally confirmed by call center or fax, before re-submitting for payment processing.

3.4 Do I have to deploy additional staff to implement Pago Fraud Screening?

No. Pago Fraud Screening is a “managed service“. This means that our analysts monitor the service around the clock. Transactions are monitored in real time so that patterns and trends can be detected immediately and negative lists, databases, industry models and pattern detectors are continuously updated and optimized.

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Questions concerning implementation

4.1 How long does it take to implement Pago Fraud Screening?

If you already process your electronic payments on the Pago platform, implementation is very fast. Only a few additional fields, required for Fraud Screening, have to be added to the standard interface. Your business model, based on the information you give us, is then allocated to one of the seven standard industry models.

4.2 Do I have to implement Pago Fraud Screening in order to process payments on the Pago platform?

Not necessarily. Fraud Screening and Pago payment processing are technically independent of each other.

However, we do stipulate the implementation of Fraud Screening for merchants with a high risk potential. We also recommend Fraud Screening to our clients operating in less risky industries, but this is not obligatory.

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Questions concerning cost and turnover

5.1 What does Pago Fraud Screening cost?

Initially you will have one-off costs for setting up the service. Then, you will have a monthly charge for the service. Operationally, you will be charged for each individual transaction. The transaction price depends on your monthly transaction volume. Detailed prices can be obtained from your Pago sales representative.

5.2 Most of my customers are from Europe. Do I still need Pago Fraud Screening?

Yes! Even though credit card fraud is not a major problem in Germany, in other countries – e.g. Britain and Spain – nearly every online transaction is made using a credit card; in these countries the number of fraudulent payments and chargebacks is correspondingly high. Credit card payment is increasing in Germany too – and with it, fraud in the CNP domain.

5.3 Will I have less sales turnover if I implement Pago Fraud Screening, because transactions will be rejected?

On the contrary. Traditional assessment methods using rigid rules (e.g. rejection of all credit card payments using cards issued outside the US and Europe) often result in the rejection of many transactions which would otherwise pose no fraudulent risk. As a rule, the rejection rate sinks upon implementation of Pago Fraud Screening. At the same time, because your fraud rate declines, your turnover will increase and non-payments will fall.

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Additional Risk Management Services

You can achieve even more security with credit card transactions with the following Pago services:

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