To counter e-commerce risk, FreedomPay taps Forter for shared fraud data

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The inability for an e-commerce merchant to know about a fraud problem at another merchant checkout page can limit transaction monitoring and security.

To bring more visibility to e-commerce, fraud prevention provider Forter is establishing a joint network with processor FreedomPay to allow merchants and acquiring banks the opportunity to share information and make decisions to block fraud in real time. It's the first time Forter has brought its technology onto the same platform as an e-commerce payments provider with hundreds of thousands of merchant accounts across the globe.

The companies are pointing to consistency as the key for the network, avoiding situations in which the online merchant, credit card issuer and the bank bring different solutions to the table in authenticating a transaction.

The timing is key, as the COVID-19 pandemic has driven more merchants — and fraudsters — online. This shift has also increased the chance that legitimate transactions could be declined because of the lack of data available in a legacy fraud prevention system.

"The problem is not necessarily that merchants have different fraud-prevention verticals, because Forter has the ability to monitor in real-time and it is fraud prevention not in the legacy era," said Neil Smith, head of business development at New York-based Forter. "We don't use scores or rules, because one rule can affect another and that can become problematic."

Instead, Forter uses machine learning and automation delivered in a software-as-a-service model.

"A payment gateway (such as FreedomPay) typically does not mandate all merchants must use a specific fraud vendor," said David Mattei, senior analyst with Aite Group. "And, likewise, a merchant does not have to sign up and buy a fraud solution if they don't want it."

However, the benefit for FreedomPay merchants is that Forter brings data from all of its customers to power informed decisions for payment processing through its network, Mattei added.

"Merchants would not do this unless there was some benefit to them," Mattei said.

Philadelphia-based FreedomPay delivers a commerce platform to its customers, assuring that merchants are compliant with regional and country-specific requirements including point-to-point encryption, EMV standards, 3-D Secure 2.0 and other secure authorization methods as outlined in PSD2 in Europe.

Forter's fraud prevention network helps ensure that only legitimate transactions are approved, Chris Kronenthal, president and chief technology officer at FreedomPay, said in a release about the joint network. "This not only increases the volume of transactions that we are able to process, but also helps build brand loyalty by providing an optimal consumer experience," Kronenthal added.

FreedomPay serves merchants across retail, hospitality, lodging, gaming, sports and entertainment, food service, education, health care and financial services.

It represents merchant categories that have fallen into higher risk during COVID, especially the gaming industry. But during the opening months of the pandemic, Forter conducted research to monitor these verticals as ones fraudsters were targeting more heavily.

"We are known for the digital e-commerce platform, but what our system does is protect the transaction in ultimately determining if you trust the person making the transaction," Smith said.

Forter protects transactions that cross into physical retail as well, Smith added, especially during COVID when retail businesses with online and brick-and-mortar presence are adding mobile pay-ahead, or pay-and-pickup, or pay at delivery scenarios.

"For years, fraud prevention has worked with transactional, linear information, and we need to go way beyond that," Smith explained. "Do you know the person and do you trust them? If you are holding credentials behind those questions, it is what makes this partnership very exciting and we are expecting great things from it."

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Online payments Fraud detection Payment fraud Fraud prevention