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Revealing PSD2, detecting MMORPG types of fraud, mitigating risks with ML: Covery at MRC Europe Spring Conference 2019

During May 13–15 we met more than 600 professionals in fraud, data science, e-commerce and payments from more than 30 countries.

It is worth mentioning, we reached out not only e-commerce players but also lots of people and companies from iGaming, Retail, Travel, Booking, Entertainment, and many other industries.

Such a great amount of attendees was not dissatisfied with a place where the event was held — the Royal Lancaster Hotel, cause it was really comfortable for all intents and purposes: the greatest exhibition hall, demo theatre, sessions spots, good WiFi connection, coffee points.

For us, not having an exhibition stand, there were no problems with the space for networking, all three floors were good for communication.

Many thanks to Ethoca for having us at your VIP party.

It was an awesome opportunity for socializing and discussing further plans for the event.

Thanks to all MRC organizers for preparing such a fantastic show and party at the National Museum of History.

That was a top-notch party. We were pleased as punch.

Agenda.

Our team has never seen so thought-provoking sessions agenda before.

While associating with all attendees and visiting sessions we gathered the main trends that are occurring now in payments, e-commerce, fraud prevention, and risk assessment.

Covery came there with a desire to share experience on how to apply ML efficiently in payments fraud prevention, ensure responsible gaming with KYC automation, and combine Device Fingerprint with global database Trustchain to mitigate the risks of fraud in high and low-risk verticals.

On Fraud 201 session the speakers Panteha Pedram and Lucia Suarez shared the best practice guidelines on how to defraud business, upcoming challenges of 3DV2, fraud patterns in alternative payment methods, and the evaluation criteria for 3d-party fraud tools.

The most highlighted topic of the session was “Friendly Fraud” especially the problem of differentiating fraud and friendly fraud.

Many thanks to Panteha and Lucia for making the session interactive! That was really insightful.

Here are some lines from the session:

  • To prevent friendly fraud you always need to check your privacy policies for gaps;
  • Always check your consumers by fraud tools for being a friendly fraudster in the past, cause it may occur again;
  • Always contact your customers to humanize the process of fraud check.

Deep Dive into MMORPG: How to Best Handle Fraud — the session guided by Thomas Pernot and Cyril Gilbert.

Huge thanks to you, guys, thanks to the sense of humor and positive attitude ofthis session, it was a breath of fresh air and replaced a cup of morning coffee.

On this session, we got the insights about the effects of fraud in iGaming and for the comparison of In-house vs External fraud prevention tools. It seems, this question arises again and again when the company experiencing hard times or planning growth and expansion.

Our main highlight — the fraud effects on iGaming industry:

  • Loss of revenue;
  • Lower sales;
  • Chargebacks and fees;
  • Reduced acceptance rates SCA/PSD2;
  • Reputation damages;
  • Loss of customer trust.

The presentation was ever so engaging, it told about the visions of two video games companies specializing in triple AAA games.

One of the most “hot” topics of MRC London 2019 was the second Payment Services Directive.

More specifically, PSD2 requirements, SCA, fraud prevention problems and opportunities.

Our team attended all three workshops about PSD2.

Huge thanks toNilixa Devlukia and Helene O. for sharing more details about the PSD2 requirements on PSD2 Workshop #1 — An Audience with Regulators.

Thanks to Bassam Chamaa, Brian Dammeir — Head of Product, Colm O’Monachain, Guy Karsenti, and Martin Sweeney for super informative PSD2 Workshop #2 — Fraud Prevention Strategy alongside SCA.

Lots of thanks to Nicolas BOSMANSSunil DixitNatalie DunneJaume Miró, John Walsh for telling about the changes and impact of PSD2 on the Payment industry.

Summing up all the information gathered on PSD2 workshops about SCA and fraud prevention, we’d like to tell about the features of Covery that will help.

First of all,

what is Strong Customer Authentication (SCA)?

SCA, in simple terms, is a new requirement of PSD2 that will make online payments more secure for both customer and bank or payment service provider.
SCA will come into action on September 14, 2019.

Currently, all the e-commerce transactions are authenticated with 3D Secure 1.0. SCA will require a new way of authentication — 3D Secure 2.0.

SCA transaction cannot be approved with password only.
PSD2 requires at least two or more authentication factors (from mentioned below) to be present:

1)Something the only user knows
Password
PIN
Signature

2)Something only the user has
Card
Mobile phone
Wearable device

3)Something the user is
Facial recognition
Fingerprint
Iris scan

Why is SCA good?

With 3D Secure 1.0 banks or payment service providers usually ask only a password to authenticate user. Passwords easily became forgotten by users. The requirements will ask for so-called and obligatory “two-factor authentication”, that will lead to less quantity of payment fraud, identity thefts, card not present fraud, etc.

The exemptions of SCA

PSD2 requires SCA for all online transactions, but there are some exceptions to make the life of consumers and acquirers easier, thus it will help to ensure high customer satisfaction rates and save customer lifetime value.

Low-risk or low-value transactions

The SCA will not be required for transactions under 30 EUR.
However, if the total amount will be higher than 100 EUR, or every 5 transactions of 30 EUR the SCA will be asked to be done by issuing bank.

Subscription

Transactions that are constantly charged for the subscription purposes won’t require SCA if they are always of the same amount. Only the initial transaction and subscription transaction amount change will need to be verified.

Whitelist

All the customers recognized as “trusted beneficiary” of the business and maintained by the bank will be exempt from SCA.

Mail Order and Telephone Orders

These type of transactions will be exempt from SCA totally. That’s because MOTO are not considered as “electronic” payments.

Non-European transactions

Or “inter-regional transactions”, type of the transaction when the issuer or the acquirer of the payment card is not based in Europe.

How Covery will help?

Covery uses both rule-based and machine learning approaches for risk logic model creation.

What does it mean?

It means, that any e-commerce company with the help from Covery will be able to set up specific to their risk logic rule-based scenarios and machine learning models to check if customer transactions could be defined or not as SCA exemption.

We get Covery in front of all high-risk and low-risk focused companies which alongside the SCA exemption “check” are seeking a powerful risk platform allowing them to predict fraudulent attacks, automate KYC procedure, automate traffic and affiliate scoring, avoid customer disloyalty risks, acquire front-rank players, and therefore save budgets.

As always, Covery is not standing still, we are working on new features.

About Covery

Covery is a global risk management platform helping online companies solve fraud and minimize risk.

Covery focuses on the versatility of the product and its adaptability to each type of business, based on the individual characteristics and customer needs using both rule-based and machine learning approaches.

The company works with high-risk as well as with low-risk industries offering customized solutions for every customer.

Find out more at covery.ai

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