Suspicious Activity Monitoring: Reducing the strain of false positives in real-time

A bank using INETCO Insight for suspicious activity monitoring while a couple makes a purchase at a retailer
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The COVID-19 Pandemic has enabled contactless payment volumes to increase quicker than previously projected. According to Juniper research, contactless payments will triple to $6 trillion worldwide by 2024, up from about $2 trillion in 2020, as the amount of mobile wallet transactions increase and banks expand the use of contactless cards. However, with an increase in digital payments, many businesses are experiencing a sharp increase in payment inefficiencies, including an increase in legitimate transactions being rejected as fraudulent.

The combination of the global economic downturn due to COVID-19 and the increasing costs of legitimate fraud and non-legitimate fraud, could be a perfect storm for many businesses.

Preparing for the storm ahead

In the world of payment fraud detection and prevention, every second counts. A typical fraud triage process often involves multiple steps and plenty of human intervention – with even more time and money lost if a transaction proves to be a false positive. Having the ability to quickly investigate and respond to suspicious activity through real-time data precision reduces the risk of financial loss due to delayed response times and limits the amount of false positives.

The following diagram shows a typical fraud triage process, which is highly manual and involves a lot of human intervention:

A diagram displaying how INETCO Insight helps fraud teams block fraudulent transactions

So, what are our options?

It is clear that false positives are a consistent burden on many financial institutions, no matter how big or seasoned they are. As the amount of legitimate and non-legitimate fraud continues to increase, it is crucial that organizations have reliant technology that is able to collect and analyze as much data as possible – all in real-time. The ability to detect precise transaction data points is key to:

Increase accuracy through machine learning – With a real-time payment fraud detection solution, such as INETCO Insight, organizations can interrogate end-to-end payment transactions and network data within milliseconds, and continuously feed the data into rule-based alerts and configurable machine learning models. Over time, the system will become even more accurate in detecting which transactions are legitimate vs non-legitimate.

Quickly respond to suspicious attacks through real-time data precision – Reduce the risk of financial loss due to delayed response times and false negatives. With real-time alerts, organizations can take immediate action to block transactions when a fraud event scores significantly higher than the set alert threshold. With a webhook called INETCO Insight Firewall Connect, organizations have the ability to automatically instruct firewalls to block an IP Address or Port. After a pre-determined amount of time, the IP Address or Port is then unblocked.

Provide accurate and trustworthy data – Access to real-time, end-to-end insights into customer transactions and behaviors provides financial institutions, retailers and payment processors game-changing knowledge into when, why, where and how payments are being declined. Organizations can use this data to reduce the number of unexpected declines and false positives.

The following screenshot from the INETCO Insight Console displays the “Unexpected Decline” alert in red, which signals an abnormal amount of cards being declined at the point of transaction.

INETCO Insight console displaying fraud alerts

To learn more about the unexpected declines, an analyst can click on the alert to view a specific transaction in order to help them diagnose whether the declined transaction is linked to fraud.

INETCO Insight displaying individual transaction details and payload messages

INETCO Insight Firewall Connect: A case study

A national payment transaction switch purchased INETCO Insight for the purpose of protecting its 40 member banks against fraud related to transaction settlements.

INETCO Insight Firewall Connect is used to automatically block transactions from specific member banks, providing time to triage potential fraud. Blocking threshold alerts are set intentionally high – 5x the standard activity level to avoid potential costly false-positives.

The diagram below shows what the fraud triage process can look like with INETCO Insight Firewall Connect.

A diagram displaying how INETCO Insight Firewall Connect reduces time to block transactions at the firewall.

To summarize:

1) An alert for potential fraud is sent in real-time to a fraud analyst

2) Simultaneously, the fraud alert is also sent to INETCO Insight Firewall Connect, which automatically instructs the firewall to block an IP Address or Port

3) After a pre-determined period of time, the IP Address or Port is unblocked

To learn more about the impact of falsely declined transactions, read our false declines post.