Inside CyberSource’s New Real-Time Fraud Analytics Tool

In today’s cybersecurity-focused world, the concept of fraud management has nearly become synonymous with the term business management.

After all, not preparing for potential fraud comes at a costly risk. That’s where CyberSource’s solutions come into the mix.

Just last week, CyberSource, a Visa-owned company, announced the launch of Decision Manager Replay — a real-time fraud analytics tool that enables merchants to both analyze and adjust fraud management strategies.

“Merchants create rules and parameters in their fraud management systems that determine whether a transaction is accepted or denied, based on risk levels,” Andre Machicao, senior VP of CyberSource, said last week. “In some cases, the parameters they set might be overly cautious, causing them to lose legitimate, safe business unnecessarily. CyberSource’s new capability allows merchants to back test prior transactions to see what would have happened if they had set different rules.”

Using CyberSource’s fraud analytics, the system can then reconfirm which transactions are fraudulent and which transactions may have been flagged (and denied) but weren’t actually fraudulent. Because the analysis takes only a few minutes, the real-time analytics tool then gives merchants the chance to adjust their strategies in order to avoid denying valid transactions. They can also pass along that data to fraud analysis for additional review.

PYMNTS caught up with Machicao and Scott Boding — senior director of risk solutions product management at CyberSource — to get the inside scoop about the benefits of Decision Manager Replay and why they believe the solution fits the complex needs of the fraud management market today.

“It is adding a very robust capability to help address a key issue that our clients had, which is increasing the ability to, on a more rapid cycle-time basis, evaluate new fraud strategies. The potential impact that those strategies could have and tune and hone those strategies to optimize it for their business,” Machicao explained. “This is a major enhancement to what is one of the anchor tenants to our overall platform.”

Boding, who brings his 16 years of fraud management expertise to the table, was the product lead on this particular solution He explained that one interesting outcome that came as a result of building Decision Manager Replay was the ability to engage with the company’s customers to see what their actual fraud management processes were and how they tackle such issues.

In doing so, he discovered the common conundrum: “There’s got to be a better way to do this.”

That means having a better way to make risk analysts do their job better and do their job in a more responsive manner. Because the Decision Manager Replay offers a real-time solution, it’s about to use CyberSource’s team of risk analysts to provide a faster and a more fine-tuned approach to managing fraud. Because, as its name implies, the solution provides a true replay of the transactions (and by using the same exact engine that’s used at transaction time), analysts were better able to match up their analysis. That means better solutions, faster responses and more targeted fraud management approaches.

In terms of broader benefits, the Decision Manager Replay has the ability to manage chargeback efficiency better, too. CyberSource’s research shows that it can take up to six months for chargebacks to actually arrive on a transaction, which Boding explained was a big curve. That means that merchants and analysts aren’t going to know within months what their full fraud outlook actually is. Instead, it trickles in over time.

That makes it difficult to test better strategies, he said, and also makes it harder to collect data in order to shift that strategy — at least before the days of the Decision Manager Replay tool.

“The new tool allows for replays or old transactions where there were already chargebacks, so it becomes so much more valuable. Replay gives them the ability to try our new rules and keep up with trends in fraud,” Boding said, which could mean concepts like moving bad transactions to the right segment.

Or, on the contrary, the merchant and analysts may discover how to take some of those transactions currently being rejected and mark them as actually good, which is another complex element of effective fraud management strategies.

“It dramatically speeds their ability to be responsive to new fraud trends,” Boding explained.

“Replay has given them the ability to go ahead and try out some new rules and say, ‘I’m seeing a new trend in fraud.’ Maybe they don’t have chargebacks. They can go ahead and prototype some rules and immediately use replay and test replay against those transactions,” he noted.

This tool also gives merchants the ability to run “what if” fraud strategy analysis. This means that merchants can test the effectiveness of their fraud strategies by running a batch of recent transactions through this new tool, which gives them the ability to re-test for fraud based on a variety of risk levels.

From a mobile perspective, there’s also key benefits that Machicao spoke toward.

“With so many of our merchant clients now seeking to really capitalize on the mobile penetration and growth, what we have seen is developing and honing a channel-specific strategy — particularly around mobile — is particularly important for maintaining and managing their fraud. The capabilities around Decision Manager Replay being able to reduce that cycle time and shrink it into the ability to do that in real time what otherwise would have taken months is of incredible value,” he said.

The Decision Manager Replay tool is available now and adds on to CyberSource’s online fraud management platform for merchants — Decision Manager. Decision Manager includes insights from more than 60 billion online and offline transactions processed annually by Visa and CyberSource.

“With a capability like Decision Manager Replay, the ability to really hone your fraud strategy and optimize around which orders are getting accepted, rejected and possibly kicked into manual review, really gives not only the ability to manage your costs around that particular activity but also manage how you scale and grow your business. Those are two key elements that we are really trying to support through this offering,” Machicao said.