risknet® real-time · agnostic real-time transaction and merchant monitoring solution is required....

SIMPLY TAKE CONTROL GROW YOUR BUSINESS SIMPLY STOP FRAUD

www.aicorporation.com| [email protected]| +44 (0) 1483 661240

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RiskNet® Real-Time

http://www.aicorporation.com/

mailto:[email protected]

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The Business Challenge

The challenges faced by Card Issuers, Card Acquirers, ISO’s and merchants to mitigate

inherent risks in payment solutions are significant. With the advent of online

authorisation, 3D secure, chip and pin and other card scheme initiatives, fraud

exposure associated with fraud types such as lost and stolen, skimming and

counterfeit have been reduced but have not been eradicated. The fraudster has

adapted and continually searches for alternative ways to commit fraud and find the

weakest link. With the advent of new payment channels and payment types and the

continual growth in online real-time, card not present transactions drive the need for

a real-time, omni-channel fraud solution.

The principal fraud challenges are now more associated with:

Account takeover

Lost in transit

ATM Skimming

Data compromise

Card not present

Cross border

Merchant fraud

And perhaps the softer fraud issues being experienced with merchants and mPOS

users:

Discount and voucher fraud

Sweet hearting

Refund fraud

Collusion



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The sophistication of the fraudster and the constantly changing patterns of fraud and

the associated approach/method dictate that now more than ever, to achieve an

effective risk management strategy, a sophisticated omni-channel card/payment type

agnostic real-time transaction and merchant monitoring solution is required.

Protection of the consumer is critical and today, no financial institution, ISO, gateway

or merchant can effectively operate without a risk solution that delivers high

performance business critical information to assist with payment analysis and fraud

control. It is essential to consolidate all payment data, regardless of channel or type,

into one system that feeds reporting, alerting and analysis to be effective in preventing

losses. With the advent of additional payment types and methods through a variety of

channels it is becoming more important to be able to view across an entire account so

that inter relationships and patterns can be effectively monitored and suspicious

activity regardless of payment transaction source can be alerted.

As important as protecting the consumer is, maintaining high customer service levels

and acceptance rates is also paramount. It is imperative that any risk solution deployed

by any business accepting payments must minimize consumer insult rates

(false/positive alerts) and maximize transaction acceptance rates - these are two key

KPI’s for any fraud detection system.

Typical fraud KPI’s for a payment accepting business could be:

Fraud Transactions – Value and amount

Detection rate

Fraud rate as a percentage of turnover

Alert level

Alert turnaround time

False positive ratio



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Response rates

Service uptime and availability

Recognising these challenges, ai developed RiskNet® real-time, with its high

performance processing platform, statistical calculations, flexible rule engine and alert

system provides the business solution for businesses accepting payments, to manage

its risk.

RiskNet® real-time is available as a licensed solution deployed within a client’s own IT

environment or software as a service – SaaS, utilising ai’s Commercial Cloud (ACC).

RiskNet® real-time can operate independently or compliment near real time fraud

solutions such as RiskNet® Issuer and RiskNet® Acquirer.

The key attributes of RiskNet® real-time being:

Card scheme and payment type agnostic – Removes the need for multiple card scheme online services

Omni channel – Provides transaction screening regardless of source

Licenced or cloud based solution

Card anchored rules and merchant (MID) anchored rules

Card scheme rule compliant (as required in real-time)

Self-service – Write your own rules



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The Solution

RiskNet® real-time provides the ability to directly influence whether authorisation

requests received, when cards are used to purchase goods or services in real-time, are

approved or not.

It can operate independently as a real-time only rules engine or to complement near

real-time rules engine such as RiskNet® Issuer or RiskNet® Acquirer, providing a multi-

layered fraud strategy.

The solution can be deployed at any point throughout the payment chain, be it direct

to the merchant, payment gateway or financial institution payment switch.

Diagram



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RiskNet® real-time is a system built to handle the need for a real-time accept or decline

decision to be made as part of the authorisation process, without affecting the

authorisation response time.

RiskNet® real-time is browser based and can be provided as a licensed production

solution or as cloud based SaaS. The SaaS service can also include a fully managed

service whereby ai’s expert fraud analysts review alerts on behalf of the Client.

RiskNet® real-time minimises the risk for fraud to be experienced whilst maximising

the revenue opportunity.



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Transaction Flow

Transactions are presented to the RiskNet® real-time rules engine and processed

against the active rule set.

NEW IMAGE

In the event that no rules are broken and automatic accept response is returned and

the transaction can be processed as normal.

When rules are broken an alert is generated and either an accept, decline response or

challenge to issuer response is automatically returned.



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Responses are typically returned in less than 300mS.

Note: when used as a real time rule manager only – only accept or decline responses

are available.

When alerts have been generated, these are allocated to a central queue for

investigation. The priority of an alert is the sum of the individual priority values of all

the broken rules associated to a transaction. Rule priorities can be increased or

decreased depending on their perceived importance.



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Investigation

Investigations are conducted using review screens, these provide all the information

and tools necessary to enable a fraud analyst to make an informed decision as to

whether a transaction or an authorisation is potentially fraudulent.

“One Stop Shop” review screens

The RiskNet® real-time browser based user interface has been designed by fraud

experts and users, it delivers maximum information in a concise readable format. The

screens are easy to understand, enabling new fraud analysts to quickly reach

maximum efficiency.

Rather than simply giving a priority score, a RiskNet® real-time generated alert is

accompanied by all the supporting data that indicates why the alert was created. This

enables fraud analysts to understand precisely how the alert was scored, so that they

are able to take the appropriate action.

RiskNet’s® real-time comprehensive user screens provide extensive information that

may be used for investigation, case management, reporting or strategizing.

Some of the features in the main investigation screen are summarised below:

Actions can be recorded against an account, examples include referring AML Team,

and the ability to place the card on to a Hot File. The list of available actions can be

configured to meet specific requirements.

Comments about authorisations being examined can be added. The system provides

many other features including violation history and a journal.



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Dynamic rule creation and administration

RiskNet® real-time offers a rule generator that allows the creation of user defined

rules. It provides a simple point-and-click interface that allows static, derived or

transactional information to be used in the creation of simple or complex multi-clause

rules.

The speed, flexibility and ease in which new rules can be created and applied in real-

time, using a point and click Wizard, enables customers to react rapidly to new fraud

trends and intervene in fraud cases as they develop. The diagram on the next page

shows the main steps in setting up new rules:

Diagram 7: RiskNet® real-time alert screen



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Rule Description - details including the rule ID, description and priority.

Rule Scope - defines whether the rule considers authorisations or statistical data that is automatically calculated from the data feeds.

Data Filters - allows the rule to consider only authorisations that meet specified criteria including values, percentages of related field data and lists.

Alert Criteria - allows further conditions to be applied. A rule break will only be generated if both the data filters and alert criteria are met.



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Rules can be defined based on the authorisation data input that can be used to detect

fraud in card-not present environments. Additional data fields include:

Email address

The IP address from which the transaction originated

Postal code of customer conducting the transaction

Billing country

Product type

Device ID



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RiskNet® real-time features a powerful statistics engine that can be used for

performing calculations on any data that is available to it.

Diagram 8: Rule set up screens

Diagram 9: Statistic set up screen



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External services, such as IP address lookup/location confirmation and device

fingerprinting can be inputted into RiskNet® real-time to be processed. The following

is a summary of the capabilities of the RiskNet® real-time solution:

Continually monitor merchant portfolio for fraud including collusion, bust out

and ghost terminals.

Block suspicious or unusual transactions.

Monitor cross-boarder and multi-currency.

Statistical analysis at merchant enabling thorough on-going risk monitoring

and analysis.

Immediate block of country, BIN range or individual cards in adverse

situations.

Potential to update rules automatically using neural techniques – thus

improving efficiency and accuracy.

Continual monitoring will significantly reduce chargebacks as well as

associated scheme penalties and fees.

Alert override

Improved and comprehensive monitoring to enable business expansion into

new territories and take on new, higher risk business lines.

Flexible architecture giving greater scalability

RiskNet® real-time is designed to respond to an individual request in less than 0.5

seconds with an average response time target of 250 milliseconds. The system is

deemed ‘business critical’, therefore it has been designed to operate 24 hours per day,

365 days per year, with the expectation of a minimum of 99.99% uptime over a year.

Scalability is supported through the ability to split the processing load either within a

single server to utilize all available resources or by spreading the load across multiple

servers. Configuration techniques included within process optimisations, e.g. thread



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counts targeting particular tasks and multi-process, e.g. creating dedicated processes

for specific portfolios and/or data types.

RiskNet® real-time is very rich in functionality and incorporates features that have

been requested by some of the world’s leading financial institutions. It continues to

be developed based upon a committed development roadmap that ensures

compliance to latest technologies, security and audit requirements e.g. PCI-DSS, new

payment methods, new channels, Client requests and ever changing fraud patterns.

RiskNet® real-time embodies a holistic approach to risk management by not just

dealing with fraud but also providing value-added functions that help our customers

to conduct their business more efficiently and profitably.

RiskNet® real-time is a real-time self-service, highly automated, sophisticated,

statistical rules engine solution which is available with or without neural model

support. RiskNet® real-time can support multiple neural models and multiple scores,

such that models can be deployed by card portfolio, by member, by region, by MCC or

as required, providing a significant benefit above other providers.

Greater accuracy

RiskNet® real-time eliminates time-consuming, cumbersome manual processes and

significantly reduces the time required to train fraud prevention staff. Errors and

mistakes are eliminated because consistent analysis is applied in an automated

manner throughout utilising a plain English rules wizard. Fraud prevention staff are

able to view and analyse all relevant transaction data faster, resulting in an increase in

the amount of fraud identified.



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Price performance

RiskNet® real-time provides unparalleled price performance and a rapid return on

investment. Being essentially a complete all-in-one solution using low cost hardware

with simple interface requirements means that RiskNet® can be installed and

operational within a few months with minimal demands on your internal IT resources.

Single application solution

RiskNet® real-time provides the tools and immediate access to all the data you need

through a single application. It streamlines payment fraud detection, providing

everything needed to detect suspicious card and account behaviour such as account

takeover, counterfeit and CNP fraud. It will also help you to reduce chargebacks,

reduce lost compliance cases, avoid card scheme penalties for excessive fraud and

improve efficiency.

Platform

RiskNet® real-time ties together all the disparate parts of the fraud-fighting process.

It has existing connectivity to numerous card management systems, core banking

systems and other supporting modules from ai, being:

SmartScore® - Self-service, high speed neural model builder and scoring engine

SmartRule™ High speed automatic rules generator

SmartIntelligence™ - Real-time BI dashboard and KPI reporting and analytics tool

SmartAlerts™ - Interactive cardholder alert communication

SmartCase™ - Enterprise case management



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Management reporting

RiskNet® real-time is fully integrated with SmartIntelligence™ providing real-time

business intelligence dashboard and KPI reporting with dynamic drill down to

transaction level.

Different image needed

Giving you control

RiskNet® real-time will put your fraud team in control so that they can react faster to

new fraud schemes. RiskNet® real-time provides information that can be used for

investigation, case management, rule generation, parameter changes, reporting or

strategizing.



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Scalability

RiskNet® real-time has been designed to scale from only a few hundred transactions

per day, to up to tens of millions per day. The system’s design enables each processor

to process about 25 transactions per second. Hence volume growth can be easily

accommodated by adding the requisite number of additional processors.

Excellent customer service

The ai Corporation (ai) has a team of seasoned fraud prevention experts that will work

hand-in-hand with you to offer fraud fighting guidance and help develop customized

strategies.



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Business Benefits

RiskNet® real-time is a system built to handle the need for a real time accept or decline

decision as part of the authorisation process without affecting the authorisation

response time.

The system dynamically evaluates a wide range of business statistics and provides

analysts with alerts, enabling them to identify cardholders, behaving out of the norm

and to take necessary additional security measures.

Key features include:

Statistic creation – the ability to dynamically generate your own aggregations of your

data and create groupings to implement within your rules.

Scheme agnostic rules – Visa, MasterCard, Amex, JCB and Diners recommended

monitoring rules can be deployed alongside one another removing the need for

managing multiple interfaces.

Self-service rule management – An easy to use, step-by-step approach to rule

building, coupled with a clear and easy to follow wizard allows for dynamic rule

management.



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Technical Overview

The RiskNet® real-time solution can be either packaged and easily delivered and

installed directly at a Client site or can be delivered as a service through the ai cloud

services division.

RiskNet® real-time is integrated into the SmartSuite of products that enables

enhanced features such as neural model scoring, rule modelling, information

intelligence and case management.

Solution deployment

The RiskNet® real-time platform is deployed across two components:

1) Application server – Made up of three key components:

a. RiskNet® controller

b. Rules engine

c. Data store

2) Database server



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RiskNet® real-time requires transactional data to be delivered to it from the

authorisation switch through an ISO 8583 interface.

The ISO 8583 interface supports over 200 user definable fields supporting card not

present as well as card present transaction data feeds.

Client interface

RiskNet® real-time’s web interface allows users to access all functions of the service

through a range of web browsers such as Internet Explorer, Chrome and Firefox.

Security

The RiskNet® 2016 solution complies with all PCI DSS and PA DSS requirements and as

such can be deployed into an organisation’s infrastructure quickly and easily.



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Additionally RiskNet® can be configured to manage user access and role based

permissions directly from the application with strong password policies or through an

integration with Active directory for user identification and authentication.

RiskNet® also provides full auditing capabilities required to monitor user and system

behaviour or if required can be integrated into auditing platforms.

Contingency and disaster recovery

As an Enterprise grade product, RiskNet® can be deployed to comply with the

contingency and redundancy requirements your organisation requires.

RiskNet® can be deployed as a single instance with cold or warm standby or can be

deployed in a fully active distributed configuration to allow for increased redundancy

and load balancing.

Software architecture

RiskNet® software is based upon Ruby on Rails, Java and SQL frameworks operating

against a Linux or Microsoft Windows platform and is implemented using a 3-tier

architecture and is primarily self-contained on a single server. All software, including

user interface is held on the central server and all processing is performed on that

server.

The system is intended to be self-maintaining in that the full life cycle of data is

supported – on a daily basis new data is loaded into the system and aged data is

removed. This includes database held data, data files and log files. Once the required

data retention periods have been reached, the disk usage and database size reach a



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relatively stable level which is maintained automatically by the RiskNet® housekeeping

processes.

Hardware

ai works with each Client to define the specification of the environment based upon

Volume of data to be processed daily

The retention period of processed data

Forecast growth in data volumes for next 3 years

The number of concurrent users to support



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Executive Summary

In today’s omni-channel global marketplace a ‘consumer self-service’ revolution is well

underway; together with the move to ‘instant mobile access’, it means that large

multinational organisations face a real dichotomy of needing to implement first class

front of house services, but are using ageing back-office systems. Added to that is a

plethora of new security and compliance requirements, as fraudsters and criminal

gangs become ever more sophisticated.

It is quite evident to most observers that large multinational institutions’ back-office

systems are under ever increasing strain. Financial organisations and large merchants

are taking a piecemeal approach to integrating creaking legacy systems with new

digital solutions. This amalgamation of real-time and batch applications, often creates

high cost human endeavour and complex processes that simply dilutes profit and adds

cost.

It is clear that agile, flexible and real-time tools and software are essential for future

success. ai has a long and exciting heritage as one of the world’s leading companies in

risk management. For 20 years, ai has provided solutions to some of the world’s largest

financial institutions, international merchants and other major payment service

providers across the globe

The RiskNet® rules engine has been developed by fraud experts. It is intuitive and fully

scalable with a valuable range of easily adaptable functionality options that can be

integrated into existing business processes. Modules of RiskNet® are offered to target

different requirements for both Issuers and Acquirers while maintaining the same core

fraud prevention technology.



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RiskNet® protects over 500 million consumer and commercial cardholders around the

world and has been designed for the prevention of fraud loss for credit, debit and

prepay for payment issuers.

The RiskNet® Rule Builder allows users to define their own fraud detection rules with

ease, using a unique point-and-click approach. Even the most complex rules are quick

to define. Static, derived or transactional fields can be rapidly selected to create simple

or complex multi-clause rules.

Rules can be defined based on the transaction data input that can be used to detect

fraud in card-not present environments and can be applied in real-time, enabling the

user to react rapidly to new fraud trends and intervene in fraud cases, as they develop.

All rules, once created, can be used at multiple levels using the novel Parameter

Change system – this feature allows one rule to be reused many times without having

to redefine it, saving time and making your rule base straightforward to maintain.

ai’s global customer base, enjoy outstanding products and services which are based

on making things simple for them – they are truly self-service and easy to use. This

means their customers can make decisions and implement them immediately, unlike

many of their competitors’ products.

Today, their self-service fraud detection rules engine is considered by many industry

thought leaders to be the best in the world. Their unique solutions, including ai’s new

state-of-the-art neural technology, protect and enrich payments experiences for more

than 100 banks, some of the largest merchants and processors. All ai’s solutions can

be supplied as hosted software, for in-house running, as licensed software, or as a

managed service.



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What Next

As well as ai’s extensive roadmap for the further enrichment and enhancement of the

RiskNet® solution, from both a technology and functionality standpoint, ai has seen

successful deployments of this reusable asset in areas such as marketing and/or credit

application management.

ai’s best of breed solutions are designed to help Clients grow profitably. As well as

optimise risk management, they are flexible enough to be applied to other business

processes that require detailed consumer insight for marketing or pricing.

ai have been actively involved in big data for many years, in order for them to provide

Clients with highly quality fraud screening, they need to process all the payment data

through our fraud tools. Ironically the systems are processing all the data in order to

get at what typically resides in 1% of the payment data.

Therefore there is an opportunity to exploit the other 99% of payment data. This is

where ai is taking a significant lead by developing the concept of re-usable technology

assets that have a multifunction capability.



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www.aicorporation.com | [email protected] | +44 (0) 1483 661240

The ai Corporation Limited 20 Nugent Road

Surrey Research Park Guildford

Surrey GU2 7AF

+44 (0) 1483 661250

[email protected] www.aicorporation.com

© 2016 Copyright The ai Corporation Ltd. All rights reserved. The ai Corporation Ltd is a company registered in the UK, number 03504225. This document does not constitute any form of contract

risknet® real-time · agnostic real-time transaction and merchant monitoring solution is required....

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