Evaluation Criteria for Fraud Detection

The independent authority on credit card processors, topcreditcardprocessors.com, is a research firm dedicated to identifying and ranking the best credit card processors in the United States. Through an in-depth vendor analysis, client evaluation, and the use of our proprietary evaluation criteria, we have put together a list of the top fraud detection services. Our analysis delves into a vendor’s business practices and compares them against industry standards to ensure that the service is quality. Often times we connect directly to the clients of a vendor and ask about their overall experience.

There are five key areas which we have identified as significant for fraud detection services:

Each provider has its own methods of analyzing incoming transactions. These can range from address and phone verification to filters that detect unusual activity. For example, criminals often attempt to make a small purchase online before moving on to larger purchases. When a small transaction comes through followed by a much larger transaction some providers have systems in place to flag a manual review of the transaction before processing occurs. Of the five main criteria for evaluating risk, transaction analysis stands among the most important.

Fraud detection doesn't help merchants if it pushes potential legitimate clients away. Detection services which require too much time or effort for the consumer hurt sales, which makes it more difficult for the merchant to make a profit. Transactions must be processed in the background without the customer knowing that the transaction is processed through fraud filters. In the case of electronic goods that customers expect instant delivery on, all but the most suspicious transactions and costly transactions should get processed immediately after the order.

When a transaction gets flagged as suspicious, the fraud detection service must have an integrated way to instantly notify the merchant. Fraud detection services that don't have staff available late-night or on the weekends in all time zones stand the risk of upsetting the merchant's customers and losing business for the merchant. When orders aren't processed in a timely fashion, many customers begin to search elsewhere for the product and may cancel pending orders. An efficient fraud detection service should recognize repeat customers and give a pass on transactions that fit the consumer's purchase history.

Fraud detection services must have a way to manually approve suspicious transactions. When a transaction comes through that gets held, customers often call the merchant to resolve the issue. A direct line to the fraud detection service helps to minimize delays by approving the transaction immediately after verifying the customer's information. Making customers wait for transactions to go through results in high levels of dissatisfaction. Most customers end up placing orders with companies that provide less hassle in the ordering process.

For high-volume businesses it becomes increasingly difficult to monitor every transaction that comes through. Evaluating the procedures that the fraud detection services use to automate transactions should help ensure that only legitimately suspicious transactions are flagged. If the name, billing, and shipping address match the credit card information on file then the transaction shouldn't typically have to go through a verification process. Knowing how the detection service evaluates transactions makes it possible for merchants to evaluate the internal processes more accurately.

General Questions:

  • How did you find your current payment processor?
  • What other payment processors, if any, have you used?
  • How many transactions do you process per month?
  • What would be three things you would change about your experience?
  • Rate your overall experience (1-10; 10 being the highest).


Service Specific Questions:

  • How does your fraud protection provider filter potential fraudulent transactions?
  • What process is in place to notify you of fraudulent transactions?
  • How long did it take to implement the fraud detection solution?
  • Were there any proprietary tools or processes required?
  • Has the service worked to reduce the number of fraudulent orders?
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