Fraud Detection API: How it Works & Key Benefits For Your Business

Fraud Detection API: How it Works & Key Benefits For Your Business

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by Bence Jendruszak

Fraud Detection APIs let you protect your business faster and more efficiently. But why do they work exactly?

An API, or Application Programming Interface, allows two systems to interact, communicate and integrate with one another. Historically, APIs were all about connecting internal software products.

But these days, businesses are increasingly opening themselves up to customers and external users. This post will examine its benefits in the context of fraud detection and Risk Operations (RiskOps), with clear examples of how it could help your business grow with complete peace of mind.

How Do Modern Fraud Detection Systems Work?

The key to powerful fraud prevention systems is to access as much customer data as possible. There’re four key points where you want to gather user data are:

  • Onboarding: when your users sign up for the first time
  • Login: when users enter their credentials to access your services
  • Transaction: when they purchase goods or a service
  • Other on-site activities like deposit or withdrawal

That data needs to be sent to the fraud detection system, which enriches and processes it with preset or custom machine learning rules.

The fraud management system will then give you a risk score, and if it’s built properly, transparent and human-readable explanations of how it got to these scores.

This then lets you trigger an action, either to Approve, Decline, or trigger manual reviews. Additionally, you can classify your users based on how risky you think they are and redirect them towards additional security measures if needed.

This is true of all verticals, whether you are in the iGaming sphere, selling items online, or operating a global airline.

So here are three examples of user behaviours that could appear risky:

  • A user signs up with a disposable email address domain. This can be checked with an email analysis tool. It seems risky because normal users would use a more established email service.
  • Your user signs in from a new device, in a new country. This is checked with your IP analysis tool and device fingerprinting module. It lets us know there is a chance someone found the login details and is using them, which is known as an ATO, or account takeover attack.
  • Your customer purchases a good or service with a credit card whose name doesn’t match their own. This could mean they are using a stolen card, which could cost you a lot in chargeback fees.

As you can imagine, you need to process a lot of data for these examples to work, and fast. Moreover, you might also want to send large amounts of historical data so that it can be analyzed by a machine learning system.

But how do you send your data points and request data to the fraud detection system? The answer, of course, is via APIs.

Fraud Detection APIs Vs Manual Data

If you want to protect your business from fraud, SEON gives you a few options. You can take your user data and feed it to our system manually, via an extension, the GUI, or you can use APIs. All have their pros and cons, but here are five reasons why APIs work better than manual data:

APIs Are More Efficient For Developers:

Developers don’t have to develop a full fraud detection application from scratch into your system. There is no need to reinvent the wheel, as all you need to do is find the correct APIs in the documentation, and automate the right queries.

Best Method to Use for Scaling

Processing a lot of data in real-time is impossible to do manually. By using APIs, you cut out the middleman and let your systems communicate directly, which not only speeds up the process, but also makes it possible to work on huge scales for thousands of simultaneous transactions, logins, or sign-ups. For instance, our fraud prevention systems deliver results under 1 second only, regardless of the amount of data to process.

Offer A Fully Automated Process

Once the APIs are integrated, all the data is sent and received automatically. This makes it much easier to manage, and reduces the maintenance and manual efforts of the fraud team and IT team. Just like with cloud-based apps, we take care of all the updates and security fixes, so you can concentrate on growing your business.

Fraud Detection APIs Allow for More Personalization

Fraud detection might plague every business, but not everyone will need to focus on the same data points and tools. Which is why APIs will let your developers decide how they want to process the information SEON delivers, and build tools that make sense for your business.

They Give You More Flexibility

At SEON, for instance, you can pay for our tool based on the number of API calls you make. This makes it very easy to scale your operations without worrying about changing contracts, whether you are in a temporary downturn or scaling your operations fast.

What are the Benefits of a Fraud Detection API?

Good for Scaling

Regardless of how talented or efficient your team is, there’s simply no way to review all the user data manually. This is where APIs really shine: by offering fast queries and responses for hundreds of thousands of user logins, transactions, or signups. The speed is particularly important for businesses and their users, which is why SEON’s solution delivers results under 1 second only.

Automation

Because APIs connect to web apps, there’s no need to constantly tweak them or wait for IT updates. All the fixes and improvements are made from the server-side, so you can concentrate on your own business instead. It’s not only cheaper in terms of IT resources, but also much more efficient and fast.

Ease of Use

APIs come with their own documentation, which helps developers code between two systems with a common language. So they don’t have to learn the ins and outs of a full fraud prevention engine’s code, they only need to look at the documentation to understand exactly how quickly they can access certain functions. Once again, this saves time and effort for the whole IT team and helps make your fraud system more cost-effective.

Flexibility and Customization Options

As previously mentioned, the kind of data you work with will be very different if you are, say, an online casino or a loan provider. Luckily, APIs are one of the most flexible solutions when it comes to custom data fields. What’s more, you can use them to create a modular fraud detection layer that only looks at the functions you need the most, giving you complete control over tailoring it to your business goals.

Pay Per API Request

This isn’t always standard practice, and especially not in the world of fraud tech but at SEON, we are proud to offer a pricing model that adapts to your business needs and auto-scales depending on how many API requests you make per month.

Three Examples of What Can Be Done With Fraud Detection APIs

  • Reverse email or phone analysis: enrich user data based on an email address or phone number alone. You can see if the phone number is valid or not based on string analysis, find its location and type, and even the person’s last login date, and a profile picture by looking at the public social data from Viber, Whatsapp or Telegram.
  • Social media lookup: see if a phone number or email address has been linked to social media accounts, such as Facebook, Linkedin, Instagram, or Twitter. You can use the data to calculate a risk score, or even as a way to track fraudsters, for instance in the context of loan repayment.
  • Data enrichment fed through a ML engine: You can connect to SEON’s rule-based engine, which will enrich data from external databases, and use Machine Learning for advanced classification. This is what helps our customers reduce their fraud rates on average by 70-80%.
Fraud detection API, fraud detection system by SEON

Why Use REST APIs for Fraud Detection Systems

APIs are usually either categorized as SOAP or REST, both of which have their advantages. At SEON, we use REST APIs, which are more lightweight and use the JSON format to receive or send information.

Fraud Detection APIs and Transparency

To make the most of fraud detection APIs, you need to be able to trust the quality of the documentation, and the server’s uptime. Which is why SEON makes it easy to access the documentation online with your API key, and to check the status of our SEON Fraud API for uptime.

Ready to Start Implementing Your First Fraud APIs?

At SEON, we have put a lot of effort into providing the best API documentation for developers. You can check our integration flow for more information, or don’t hesitate to contact us for a free demo to see how we can help you grow your business safely today.

FAQ

How much does a fraud detection API cost?

This varies depending on how the company operates ie some offer a set fee for overall usage whereas others, including SEON, offer more flexible pricing based on the amount of API requests.

How long does it take to set-up a fraud detection API?

Integration can be done within 24 hours but this differs depending on the product you choose and results are often be more precise once the solution has been in operation.

When should I be using a fraud detection API?

As soon as realistically possible. The longer you leave your business unprotected, the risks of fraudulent attacks/activities will continue to rise.

You might also be interested in reading about:

Learn more about:

Data Enrichment | Browser Fingerprinting | Device Fingerprinting | Fraud Detection API | Machine Learning Fraud

Related Source for this article:

  1. Tech Crunch:  APIs are the next big SaaS wave
  2. University of Cambridge:  Explainable Machine Learning for Fraud Detection
  3. OCADO Group:  Using Google Cloud and machine learning to improve fraud detection
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Author avatar
Bence Jendruszak
COO

Bence is the co-founder and COO of SEON whose vision is to create a safer online environment for merchants in high risk verticals.


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