As consumers continue to rapidly adopt digital payments (including e-commerce purchases, mobile payments and money transfers), financial institutions and payment providers are balancing the growing need for fast and convenient transactions against rising fraud attempts.
“Consumers expect to be able to conduct their financial transactions where they want, using whatever device they want, at whatever time of day they want,” Dave Schneider, President of PULSE®, recently explained. “This comes with challenges that we, as an industry, have to figure out how to solve.”
“If there’s friction, consumers will use another card, or they’ll abandon a cart. They might break up with a merchant, and sometimes they’ll post their outrage online,” noted Jennifer Schroeder, PULSE Executive Vice President of Product Management.
“Consumers expect to be able to conduct their financial transactions where they want, using whatever device they want, at whatever time of day they want.”
Dave Schneider, President of PULSE®
PULSE is working to address these and other issues that are top-of-mind for payments stakeholders. The network has introduced three initiatives, and is working on two others, to help combat fraud and other card-not-present (CNP) challenges. Each of these speaks to significant opportunities to support quick, secure and convenient transactions for issuers, processors, merchants and consumers.
1. Dispute lifecycle enhancement
It’s impossible to talk about CNP transactions without addressing the impact of chargebacks. In 2022, PULSE implemented a series of chargeback enhancements to increase collaboration and reduce time to resolution with an added pre-dispute stage. With this new feature, merchants and issuers can now interact directly before entering the chargeback stage.
“This provides an opportunity to resolve disputes more expeditiously and reduce expenses,” Schroeder said.
PULSE is planning further enhancements to chargebacks, which will be announced in 2023.
2. Decline reason transparency
Growth in CNP transactions has resulted in an increase in transaction declines. In response, PULSE is working to improve data quality so card-on-file merchants can better understand the reason for a decline and plan their next move. The network rolled out a program this autumn to provide more transparency about why a decline occurred and whether the merchant should expect an approval if they try the transaction again.
“Our goal is to improve the specificity of the decline reason code from issuers to help reduce unnecessary reattempts by merchants for the same transaction,” Schroeder explained.
Now, decline reason codes are grouped into four different categories for greater clarity, which helps merchants understand their next steps. These are:
- Do not reattempt
- Try again later with the same information
- Try again later with new information
- Generic decline codes
PULSE remains in constant conversation with issuers and issuer processors to ensure they understand PULSE guidance so that they can improve the clarity of their decline response communication and boost authorization rates.
3. More robust ways to stop bot attacks
To combat fraud, the best defense against a bot attack is a better bot. That’s why PULSE has created a bot to take on fraudsters who are using rapid-fire bots. This fraud-mitigation strategy employs robotic process automation to block cards associated with bot attacks rapidly after detection.
This tool went live in late July with strong results. By identifying these bot attacks, PULSE has enabled issuers to block multiple attacks per week. One issuer alone was able to block over $10 million of suspected fraud attacks and was alerted to an additional $40 million. Best of all, these new bot-attack rules show a low false positive ratio of 1:1.
To use this service, issuers must be enrolled in DebitProtect® Authorization Blocking.
4. Fraud risk assessment tool
Working with FICO®, PULSE has developed a BIN-level aggregation tool designed to enable network-level risk assessment based on variables other than account numbers. These variables will feed into the DebitProtect anomaly detection and fraud-monitoring program and will help protect network participants from systemic fraud risk events, like merchant fraud occurring across multiple issuers. PULSE participants will learn more about this new capability in 2023.
5. Side-by-side token service
PULSE is developing a side-by-side token service to enable merchant routing choice for card-on-file transactions leveraging network-based tokens. The service is scheduled to be available for pilot in the first half of 2023. This service also will be made available to other back-of-card networks in an effort to bring one solution to the market.
The side-by-side token service will enable tokenized transactions to be routed over a debit network unaffiliated with the front-of-card brand network. This enhancement will allow PULSE to continue to compete in the card-on-file market as merchants increasingly implement network-based token solutions.
Providing routing choice on tokenized transactions is an important capability, as tokenized transactions are covered in the Federal Reserve Board’s Regulation II rule clarification. The initial launch of side-by-side tokens is designed to enable PULSE issuers to easily support the functionality, with no change in the cardholder experience.
To learn how you can take advantage of these product enhancements, contact your PULSE account executive or a PULSE debit expert.