In the past, risk and fraud systems were managed separately, by different teams with different strategies and objectives. It’s been that way for many years, but we’re now starting to see a softening of the boundaries, especially at PSPs and merchant acquirers.

Many of these firms are pioneering the drive to bring together risk and fraud into one coordinated system, managed by one team, using one tool to do real time fraud prevention, as well as real time credit risk analysis. The reason for this is, as you would imagine, the desire to grow their businesses.

The merchant acquiring space is increasingly competitive, and it is seeing more and more specialist providers try to join in the land grab. To stay ahead and protect their share of the market, acquirers find they need to push into more risky territory, but it is essential that the businesses isn’t actually more risky in nature.

Outlets such as gambling, adult entertainment, airlines and online ticketing have a reputation for being the high risk categories in the payments business, because they have typically been seen as a haven for criminals. Whether it is fraudsters using stolen data, or simply business ventures that pop up with no long-term business plans, it has all contributed to tagging all business in these categories as risky, even when they may be potentially strong with genuine plans for the future.

Onto this playing field we now see a new force - a new breed of Acquirer/PSP who will combine the latest payments and fraud technologies with their risk analysis systems, because, after all, the transactional data is the same for both. They incorporate key risk elements into a live transaction monitoring system to establish risk ratings for their merchants.

These new risk ratings enable a much more targeted, granular approach to rule writing and analytics, whilst incorporating complex risk functions into live systems which can continually calculate and analyse key risk metrics. This will include factors such as net exposure, maximum possible loss or other risk KPIs for every single merchant. If the balance shifts towards exposure and risk, the system creates real time alerts for the risk team to act upon.

This new approach to fraud and risk means that acquirers and PSPs are able to take on business that they would have turned down previously, with the confidence that the system will monitor behaviour, live, with every single transaction.