Barclaycard works with Kount to support SCA, combat e-commerce fraud

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Barclaycard is working with Kount to power its new Transact fraud module, which will use the Identity Trust Global Network.

Digital fraud protection provider Kount will be offering real-time fraud screening using adaptive artificial intelligence and machine learning to help Barclaycard’s business clients prepare for Strong Customer Authentication (SCA) requirements, which are part of Europe’s PSD2 directive.

In addition, Kount will be using its Identity Trust Global Network to better detect fraud at point of checkout, reduce false positive detections and chargebacks. Barclaycard Payments, the card processing unit of Barclaycard which processes almost 40% of card transactions in the U.K., will use Kount to power its Transact suite of fraud detection software.

“Our goal is to deliver a best in class shopping experience for our merchant customers,” said David Jeffrey, Director of Product of Barclaycard Payments, at Barclaycard. “This partnership brings together a fraud and risk detection engine that assesses transactions in a simplified manner for large to small merchants. Essentially it will provide enterprise-level fraud detection for the masses.”

Barclaycard says that the introduction of the fraud module will help its businesses prepare for the strict SCA regulation due to its ability to identify genuine traffic; and be exempted from the requirement of two-factor authentication for online commerce. The two-factor authentication adds friction at the point of payment, which is a major obstacle for e-commerce sales conversion, often leading to shopping cart abandonment.

Jeffery noted that there are two key dates for SCA regulated transactions — the first in December 2020 for European-issued cards and the second in September 2021 for U.K.-issued cards.

“We believe that merchants should be ready at the end of 2020 regardless of if the customer has a European card or a U.K. card, since the technology will be available to serve that need,” said Jeffrey.

The Kount-powered Transact fraud module will be able to help businesses overcome this shopping friction by taking advantage of SCA-approved Transaction Risk Assessment exemptions. The exemptions are given to transactions which are judged to be sufficiently genuine, and therefore allowed to skip the two-factor authentication process up to pre-agreed thresholds.

“Not every transaction needs to go through SCA authentication, which can deliver processing efficiency. By identifying legitimate, low-risk transactions that can be verified, it makes the online shopping experience more productive for the merchant and better for the customers,” said Jeffrey.

Kount’s Identity Trust Network covers 32 billion annual interactions from more than 6,500 customers across more than 75 industries. Kount’s AI uses both supervised and unsupervised machine learning to detect existing and well as emerging fraud trends. Kount claims that its customers have reported a 99% reduction in chargebacks, 70% reduction in false positives and an 83% reduction in manual reviews when using its fraud detection tools.

In March, Kount launched a security layer for its clients that is designed to prevent account takeovers, an increasingly popular and costly technique used by fraudsters. This addition came on the heels of Kount’s February expansion of its strengthening its artificial intelligence-powered Identity Trust Global Network with software for determining how long email addresses have been in use.

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Fraud detection Compliance Barclays Artificial intelligence Machine learning