Capital One and Microsoft team up to fight fraud at the point of sale

The majority of people with a credit card have heard or read the words, “Your card has been declined.” When a card issuer detects fraudulent activity, this phrase protects cardholders from illicit charges or identity theft. A wrongful rejection, however, has a cascading effect on everyone involved in the transaction; impacting the merchant’s revenue and reputation, straining the card issuer’s fraud protection team, and damaging hard-won customer trust.

That is why Capital One and Microsoft have innovated on the way transaction data is shared between merchants and card issuers, which helps boost acceptance rates for millions of valid transactions across the globe.

By improving the way transaction data is shared between Capital One and merchants that use Microsoft Dynamics 365 Fraud Protection, we can reduce false-positives and improve fraud protection. That translates to lower fraud costs, increased acceptance rates, and a better customer experience.

Jeffrey York, Chief Financial Officer for Microsoft Business Applications, recently video-chatted with Sarah Strauss, Head of Fraud for U.S. Card at Capital One, about the collaboration. I encourage you to watch the full 15-minute conversation, which adds additional context to highlights that follow.

Bridging merchant and card issuing banks to decrease false-positives

“At Capital One, we are always looking for ways to better service and protect our customers,” explains Strauss. Capital One has been on a multi-year technology transformation that has enabled the company to accelerate the volume of innovations for its customers, and protecting customers from fraud is a huge piece of that.

Fraud is an extremely complicated and incredibly fast-moving threat, and Capital One is actively working to detect fraud and potential fraud at or before the moment it occurs.

This is especially important today as spend continues to shift to online, which has high rates of fraud. Strauss attributes this urgency to the rise of Coronavirus-related scams to access credit card and other personal information, coupled with a boost in card-not-present e-commerce spending as people shop from home. “It’s been really important for us to keep an eye on that and ensure we’re protecting our customers and delivering great experiences when they’re trying to spend.”

Strauss says Capital One developed its cloud-based authorization capability—the Enhanced Decisioning Data API—to ensure they are delivering great experiences for customers, and to help protect customers in situations where their information may have been compromised. The authorization capability helps to protect cardholders from fraud at the point of sale, ensuring risky transactions are blocked while approving valid transactions, so customers can get on with their spending and carry on with their day.

By feeding merchant-side customer and transaction data to the authorization capability right at the point of sale, it’s a “win-win scenario,” according to Strauss. For customers, “you have additional capability to be protected from fraud” by avoiding false-positive declines. Merchants benefit from directly contributing data that helps ensure low-risk transactions go through, returning additional sales revenue and stronger fraud protection. Capital One customers benefit from consistently great experiences at the point of sale. “We believe that, by leveraging technology and being able to engage with both merchants and consumers in a different way, it really benefits the overall ecosystem incredibly.”

Partnering for exceptional, secure point-of-sale experiences

“We’re really excited about our partnership with Microsoft,” explains Strauss. “One of the features that sets this solution apart from others in the market is the transaction acceptance booster, which provides a direct communication channel for contextual transaction data, called transaction trust knowledge, with participating issuing banks and networks.”

The collaboration will directly benefit merchants using Dynamics 365 Fraud Protection. A feature that sets the application apart from other solutions in the market is the transaction acceptance booster, which provides a direct communication channel for contextual transaction data, called transaction trust knowledge, with participating issuing banks and networks.

“What’s been really cool is that we’ve built this way for merchants to connect to a relatively simple API, enabling them to share data with the right elements of consumer privacy, and get that information over to Capital One before the authorization comes through the Visa/MasterCard network. This delivers a much better decision to the merchant and to the customer on whether or not to approve or decline the transaction.”

Once enabled in Dynamics 365 Fraud Protection, transaction trust knowledge is transmitted to Capital One and algorithms run in real time to optimize and maximize acceptance rates.

“We think there’s tremendous power in this capability, both to reduce those false-positive declines and to capture the true fraud. This reduces strain on the ecosystem of merchants, including Capital One having to take a fraud claim, and merchants getting the charge back and having to process that. I think there’s an opportunity to just create tremendous value.”

Get the full story

Watch the full conversation between Jeffrey York and Sarah Strauss as they go deeper into how Capital One is working with Microsoft to protect customers from fraud, and be sure to check back for more conversations about people and organizations making an impact in the coming weeks.

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