Smart Acquiring Platform in Contactless Payments using Advanced Machine Learning : Security Controls using Device Recognition, Geo Fencing and Customer on File

Abstract

Acquiring platform (Merchant Bank) today faces greater Merchant Fraud cases (catering to small medium business) post pandemic as new methods of payments are evolving. In many cases, the fraud merchants, present the legitimate Know Your Customer (KYC) documents and complete onboarding like a legitimate merchant profile. Acquirers need to mitigate the merchant risk in Payments (multiple method of payments – card Present, card Not Present, contactless Payments (Tap to Pay, Apple Pay, Samsung Pay, using Near-Field Communication (NFC) and biometric based payments), in Point of Sale (PoS) and in large ecommerce portals). To address this, acquiring platform needs to build a comprehensive risk management platform with large set of data from multiple sources (device activity, merchant activity over time, analyze merchant portfolio for a specific geography and finally line of business). Acquirer needs to also analyze KYC data as well as payment data (over period of time). While doing so, risk platform needs to address both account fraud and payments fraud. It also needs to balance accuracy in fraud detection and without compromising high authorization rates. As new payment methods emerge, it is critical that risk management platform gets data from various sources in addition to just KYC and payment data. These are device /peripherals – Internet of Things (IoT) data, leveraging estate management, tracking geo location, analyzing transaction pattern (over period of twenty hours), profiling merchants and merchant segmentation. Risk management platform needs to address PoS3 needs specifically.