Transactions lead to risk. Transactions include authorizations, charges, refunds, chargebacks, and may also include other activity including:

• Use of trials, offers, or promotions.
• Consumption of goods or services.
• Accrual, transfer, or redemption of stored value.
• Payments to partners or affiliates.
• Internal employee-generated transactions (including plan changes, exceptions, credits, voids, and refunds).

To effectively manage this risk, each transaction should be evaluated to determine whether it’s from a good customer, a criminal, or requires manual review to make the determination. Many firms develop these criteria using ad-hoc processes that cannot be quantitatively defended and worse, firms often fail to monitor performance of these rules. Key performance criteria, often ignored, include the following:

• Decision making or process failures that result in acceptance of excessive fraudulent transactions.
• Rejections of excessive transactions from good customers.
• Poor decision making or efficiency in the manual review process.
• Bad customer experience that may result in customer insults, order conversion failures, order abandonment, or account cancellation.

Our Analytics practice helps merchants find the right criteria to perform transaction acceptance work in a way that allows management to be confident that the right decisions are being made and the right processes are being followed.

Benefits

• Maximize profitability by fine-tuning transaction acceptance criteria to minimize rejection of transactions from good customers, maximize elimination of transactions from criminals, and minimize the number of transactions identified for manual review while ensuring the best possible customer experience.
• Ensure that economically optimal performance is maintained by measuring the optimality of transaction acceptance criteria to prove that the economically optimal criteria are in place, to measure performance of those criteria, and to identify business shifts that call for re-calibration

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