a holistic approach to fraud detection

Managing Fraud in Omnichannel World

The current retail fraud detection procedures are so rudimentary that the top security measure is online authentication, according to ACI Worldwide and Forrester research paper Managing Fraud in an Omni-Channel World

With 65 percent of merchants relying on online authentication so much, it is easy to say that omnichannel caught merchants by surprise. All of the sudden, customers want to buy not only via internet but also via their mobiles, tablets, TVs, gaming consoles and so on, and using multiple payment methods to boot. 


This is driving revenue as well as opening new possibilities to enhance offers. But it is also driving frauds.

"The customer must feel protected, yet, at the same time, also able to transact effectively when and where they need to." says Simon Breeden, Senior Fraud Solutions Consultant at NCR Limited. 

"The customer experience is paramount in all the decisions that are made and taken: an unhappy customer is potentially a lost customer."

To be able to use true omnichannel detection is a significant challenge. Mr. Breeden explains, "If it were easy, everyone would be doing it! The challenges lie in being able to associate different vertical silos of information horizontally, across all the channels, therefore creating an accurate cross reference grid of information pertaining to an individual." 


According to ACI Worldwide and Forrester research, more than 90 percent of retailers gladly jumped onto the omnichannel bandwagon, introducing dedicated mobile websites and mobile apps, however only half of them have considered the risks involved. Merely 46 percent of merchants use fraud management solutions across all purchasing channels because the problem with a holistic approach to fraud detection has many layers. Merchants want to find a solution but 65 percent of them believe they lack adequate fraud management tools to support effective measures suitable for an omnichannel environment. 

They also lack skilled employees: 54 percent merchants stated that they don’t have the competencies needed to deal with omnichannel fraud. When it comes to in-store purchases, 74 percent of merchants uses EMV/chip and PIN technology to authenticate while 87 percent use real-time rules/scoring engines to remain one step ahead of cyber criminals.

"The future of fraud detection technology is that it will become more reliant on increased information of better quality. The technology will need to take a more holistic view across as many channels as possible – not just financial transactions – but any transactional data that will help in the detection of possible fraud", concludes Mr. Breeden.


Aleksander Pivk, Practice Leader at SAS Adriatic Region, talks about the biggest challenges in detecting fraudulent transactions on the Internet in real-time:

"The biggest challenges would be detecting and tackling fraud in real time and limiting false positives to an absolute minimum. Also, it is quite a challenge to be prepared to execute transactions initiated by third parties on behalf of customers and to have an accurate overview of the fraud cartography across geographies.  

Implementing continuous optimization of a risk-based approach across all channels, improving and accelerating the investigation processes in order to be able to quickly understand new fraud modus operandi and to adapt defense strategies with agility are also some of the challenges faced in detection of fraud."