MasterCard 'Simplifies' SMB Fraud Prevention

Talk about an eye-opener.

Nearly nine out of 10 (86 percent) SMBs recently expressed concern about data security for their business, and more than two-thirds (67 percent) said they don’t have a great understanding of what data security means for their business.

It’s then not all that surprising that more than half of those surveyed (60 percent) said they don't use fraud prevention tools.

Shocking, perhaps, but for a variety of reasons, not all that surprising.

And that’s where MasterCard saw an opportunity to step in and help out.

Today (May 23), MasterCard launched Simplify Controls, a fraud prevention tool that will help SMB owners control, prevent and monitor eCommerce transactions in real time. This solution was launched to complement its Simplify Commerce platform that helps businesses maximize online sales by separating legitimate orders from fraudulent transactions.

Those survey results, which come from a MasterCard-commissioned online survey of 3,000 SMB owners in eight markets, indicate that the security concerns of these small merchants are linked to a couple of big things, including their comfort level with payments made using mobile payment technologies. For example, there was moderate confidence in the level of risk and security associated with contactless payments made via a mobile device/watch (55 percent were confident), digital wallets (53 percent) and biometric authentication (45 percent).

Of greatest concern, however, is SMBs' concern that using fraud tools forces them to give up control of their business, namely which transactions are authorized and which are not.

"Some of the feedback that we've received is that [small merchants] are looking for more control. They have little or direct control over the transactions that they submit [for authorization]. And they really want simple, real-time capabilities on the go. This is something, from our perspective, that is a matter of a specifically tailored solution for the small and medium enterprise segment that can help them run their business and give them the visibility and control that they are looking for," Deborah Barta, Simplify Commerce global lead at MasterCard, told PYMNTS in an interview shortly before launch.


Putting The Merchant Back In Control

MasterCard hopes that Simplify Controls will help SMBs gain the confidence needed to see that their fraud solutions are well within their control.

Simplify Controls allows SMBs to have real-time access to important transaction data wherever they may be, via a mobile app and dashboard. That dashboard, as the name implies, allows the merchant to customize their fraud settings, including transaction size, country of origin and repeat transactions.

That means that merchants can set up the system to auto-decline transactions that match their risk profile or manually decide based on criteria that they establish in advance.

Simplify Controls also delivers smart alerts to keep business owners aware of any potential suspicious activity.

Barta says that this is MasterCard’s way of offering “a layered security approach” to the SMB.


Understanding The Full Scope

For now, Barta said the goal with Simplify is to grow acceptance and expose SMBs to the same world-class fraud capabilities that their enterprise merchant counterparts have. And since the expectation is that, post-EMV, the fraud shift will move online, this is an effort to help SMBs stay in front of what is likely to be a wave of fraud.

"Some of these SMEs are simply not into that space enough yet to really understand the full impact of [the post-EMV] hit. And they are starting to realize it now, especially with their online sales growing," Barta said

MasterCard's research also shows that 90 percent of those SMBs surveyed saw an average sales increase of 40 percent, which points to the opportunity that online presents for them but also the vulnerabilities that it could create at the same time.

"Their sales are growing rapidly, and now, it's becoming a sweeter target for fraudsters now that that channel has been exposed," Barta said. "Fraudsters look for targets of any size and flavor, as long as they can make a win for themselves. Unfortunately, for the small businesses, it can hurt them on a magnitude significantly larger than it can hurt an enterprise, depending on the type of fraud attack."


Shifting The Fraud Burden

And as those threats grow, MasterCard hopes that its Simplify Controls capability will blunt the pain and plans to make it easy for the merchants and developers to integrate. Simplify Controls is available through a plug-and-play SDK and API. Simplify Controls also integrates a fraud scoring solution from Kount, which uses its “decisioning” engine to analyze hundreds of relevant variables and activity from each transaction in real time and score the transaction.

"We are basically serving up a set of rules for them that they can select based on their risk tolerance, then they can auto-decline transactions — based on their risk tolerance — in real time and be able to have that control for their business," Barta explained.

Giving that control enables SMBs to instead turn that focus toward what they care about most: their bottom line and cash flow, which is also where the Simplify Commerce platform comes back into the fold.

"We want to take as much as we can off of their plate,” Barta said. She emphasized that, because Simplify Commerce is PCI-certified, it also reduces the SMB’s PCI burden. The hope is that, once these merchants begin to see the data, they’ll become more knowledgeable about chargebacks, fraud, the importance of fraud prevention for their business and the role that emerging technologies and payment methods can play in reducing the fraud risk with those transactions.

“Simplify Controls can help business owners grow sales and breathe a little easier knowing that bad transactions will be declined and good transactions will get through," said Barta.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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