MRC Communities: Final Fraud Community Call of 2024 Recap

Recap: Fraud Community Call on Open Banking and the Visa Acquirer Monitoring Program (VAMP)

On 21 November, our final 2024 Fraud Community Call welcomed guest speaker Pierre Gautreau from Link Money, who provided insightful perspectives on open banking and fraud risks. Here’s a summary of the key points discussed during the call:

Open Banking and Fraud Risks

Pierre highlighted the transformative potential of open banking, emphasizing customer-initiated pay-by-bank transactions. This approach offers several fraud prevention benefits:

• Enhanced Data Insights: Bank accounts provide rich data that aids in decision-making. This includes identifying new accounts, first-party fraud risks, and offering positive signals for legitimate customers.
• Signal Utilization: Leveraging diverse signals helps distinguish fraudsters from genuine consumers, reducing fraud without impacting good customers.
• Collaborative Fraud Prevention: Effective fraud prevention involves analyzing customer history to identify healthy behavior patterns. Collaborating with financial institutions is crucial for fully harnessing open banking’s benefits.
• Increased Security: Open banking’s multi-step verification processes make it harder for fraudsters to access banking credentials or exploit traditional accounts using just routing and account numbers.

Pierre also noted that bank transactions typically exhibit much lower chargeback rates compared to credit card payments. Additionally, open banking can attract customers who prefer bank payments over credit cards, offering an appealing alternative with manual review processes to ensure secure authorizations, particularly for shipping transactions.

Visa Acquirer Monitoring Program (VAMP)

The call also covered updates on the Visa Acquirer Monitoring Program (VAMP), which aims to simplify fraud tracking for acquirers, merchants, and partners. Key points include:

• Program Scope: VAMP currently focuses on fraud tracking at the acquirer level but also allows detailed analysis at the merchant level.
• Upcoming Changes: New fraud thresholds will take effect in April 2025. Merchants are encouraged to engage proactively with their acquirers to understand their status and potential fees under these changes.
• Preparation Recommendations: To prepare for the new thresholds, Leaders recommend running simulations using data from the past 12 months to determine where merchants stand. This proactive approach provides ample time to make necessary adjustments and ensure readiness for the changes. Click to view the VAMP Global Overview for Merchants Presentation

Key Takeaways

Open banking continues to reshape the payment landscape, offering enhanced fraud prevention capabilities and lower chargeback rates. Meanwhile, the forthcoming VAMP updates highlight the importance of proactive collaboration with acquirers to maintain compliance and minimize risks.

For merchants and partners, staying informed and taking early action are essential steps to navigate these evolving fraud prevention landscapes successfully.