So to ensure you’ve got all the right tools to beat fraudsters, we compiled a list of all the major risk management providers currently operating on the tech landscape.
We’ll go over pros and cons of each, and will hopefully help you pick the best one for your needs.
But first, a quick word about transparency:
Wait – Aren’t You a Risk Management Startup?
That’s right. And in fact, SEON was founded after we tried many competitors’ assessment software. We couldn’t find one that worked perfectly for us, so we built a platform with all the features we wanted to see.
But we also know that we’re new to the space, and our tools are constantly evolving. So we’ll be the first to admit when you’re better off looking at another provider.
And now that’s out of the way, let’s get started on understanding the core differences between various risk management tools.
What to Consider For Your Risk Management Tool
Before we go over a list of the best solutions, let’s examine what categories of tools you’ll find, and some key features to consider.
There is really only one way to fight transaction fraud: acquiring more knowledge about your customers. But what you can do with it varies based on the kind of risk software you’re using:
Data enrichment tools: these solutions let you aggregate more info based on a single point like an email address or phone number. Great for manual reviews, or for managers who just need extra insights. Some calculate a risk score, others simply deliver in raw form.
End-to-end platform: you will get data enrichment, and rules to calculate a risk score more efficiently. This gives you a lot more control and flexibility over how to mitigate risk. The most sophisticated platforms will use machine learning to help you discover new risk rules automatically.
While all fraud companies operate under the SaaS model, you can also roughly group them based on how they charge:
Chargeback guarantee: the provider will charge a percentage of the amount processed, and offer to cover the fees in case a chargeback request slips through the net.
API or check based: you pay a micro fee every time the software checks an action.
The second option is straightforward and self-explanatory. You only pay for what you use.
The first, however, warrants a bit more investigation. On the one hand, chargeback guarantee models are great because your business won’t have to deal with disputes any longer.
But on the other hand, there is a strong incentive for the risk management tool to block more payments that would have been valid. They are more conservative when it comes to false positives, which could actually damage your bottom line in the long run.
Another important factor to consider. Do you want to go with a mature, reputable seller? Or a newcomer who’s trying to make their mark on the tech scene?
Both have their pros and cons:
Legacy tools: a.k.a enterprise risk software. Better suited to enterprise clients. These are risk companies that have decades of experience, and a well-oiled workflow for checking bad data. The downside is that their risk management software rollouts are slower, and datasets can become stale – especially when they use shared blacklists (a merchant marks a credit card as fraudulent, and it’s blocked across the entire platform for every other client). They also tend to be much pricier.
Startup model: the adapt-or-die model fosters innovative technology, usually run by younger teams. There may be growing pains, but also a more agile approach to risk, which can be helpful as fraudsters are always evolving their attacks based on your line of defense.
What are the tools used in risk management
You will find that the most common ones include data enrichment (to learn more about our customers) and risk scores. It can focus on IP and email addresses or phone numbers. Risk scores are calculated based on rules you create in our system.
Hidden Costs and Other Things to Consider
Let’s now look at all the extra parameters that may affect your ROI when it comes to detection:
Integration time: the longer it takes to deploy the solution, the more you are losing to fraudsters.
Training / learning curve: similarly, if the product is too complicated, it could be weeks or months before you start seeing some real results. You might see a ton of false positives and negatives until the solution really “understands” the transactions processed by your business.
Support as extra: some providers have a limit on how often you can contact their support team.
Okay, without further ado, we can now start looking at specific examples with the key fraud tech providers operating today. (You can click on the name to jump directly to their description.)