SPECIAL EDITION • APrIL 2012

Dear readers!Over the past months and years, we have frequently informed you of the range of security procedures used in the credit card arena and raised your awareness on the topic of security in the field of card-based payments. The contents of our “Wissen Macht Sicher!” (“Knowledge Makes Safe!”) campaign – which covers areas such as PCI DSS, 3D Secure and EMV – have meanwhile become European standards. With intelligent prevention, state-of-the-art fraud prevention systems and its expertise in card-based payment security, Postbank P.O.S. Transact sys-tematically remains one step ahead of the market. Its proActive system solution increases card payment security and helps prevent fraud – both for the online mer-chant as well as the storeowner down at the local shop. This can translate into fewer bad debts, fewer chargebacks and less effort along the entire value added chain. Despite the comical cover picture, we are dealing with a very serious mat-ter. The German slogan “Verdächtig” (“suspicious”) for the clearly forged image of the Mona Lisa embodies proActive’s ability to detect fraud early on. This special edition of P.O.S. will give you an insight into Postbank P.O.S. Transact’s fraud prevention processes.

Postbank P.O.S. Transact wishes you fascinating reading!

K a r t e n a k z e p t a n z f ü r H a n d e l u n d D i e n s t l e i s t u n g

verdächtich

Verdächtich

Postbank P.O.S. Transact

offers proactive protection

for E-Commerce

2 P.O.S. – Special Edition April 2012

The glut of studies relating to e-commerce payments documents the will and

need of market stakeholders to discover more about this part of the processing

of an online transaction. How do the merchants work? Which experiences have

they already gained? Who advises them on the optimal payment method mix for

their businesses? Which costs arise for them? Do they feel customers pressurize

them into accepting certain payment methods? Which strategies are pursued?

Many questions – and many answers can be found in the research institutions’ and industry associations’ study folders. With “IZH6 – Internet Payments from a Merchant Perspective”, Postbank P.O.S. Transact GmbH is for the second time now supporting the IZH survey series which is organized by the Cologne-based E-Commerce-Center Handel retailing thinktank. The security topics have top priority at the Eschborn-based payment service provider (PSP), and for e-commerce merchants. Security is one of the most im-portant requirements for an online payment method.

Less is more: lower risk for the merchant

The new security features integrated into the acquiring company’s proActive anti-fraud system make credit card acceptance an inter-esting proposition, especially for e-commerce enterprises. “From a merchant’s perspective, the most important characteristics of a pay-ment method are universal acceptance for the customer and a low level of risk for the companies accepting it. Customers also rate

a ‘high degree of recognition’ and ‘popu-larity’ of the payment method, as well as ‘quick and easy usage’ as vital attributes,” the IZH study concluded. “With these state-ments and findings, credit card acceptance is emerging as a key element in the payment mix offered by e-commerce merchants,” explains Postbank P.O.S. Transact GmbH CEO, Daniel Jagodzinski.

Merchants are also enthusiastic about the range of additional security features available when accepting credit card payments. “In addition to SSL encryption, requesting the card security code and special authentication, our merchants will also be able to use new tools for proactively combating fraud risk in future,” says Mr. Jagodzinski resolutely about the development of new security measures in the e-commerce sector.

Familiar: the credit card as an online payment method

The fall in bad debts corroborated by mer-chants in the survey is also a cogent argu-ment for the use of credit cards. In 2009,

26 percent of the companies said they had suffered bad debts of over 1 percent – at the moment, the figure is 29 percent. As a result, over half the respondents said they use standardized summons and collection procedures.

Wrong addresses and false account numbers, as well as only partially settled invoices, are also a challenge – problems that can be ruled out by credit card acceptance from the very start. “That is also one of the reasons for the merchants’ intensified plans to add credit cards to their payment portfolios,” explains Mr. Jagodzinski. For the merchant, too, the share of online sales is also an indi-cation of the positive trend for credit card acceptance – which, at 8.3 percent, now ranks #4 behind cash in advance, PayPal and payment on invoice. 27.3 percent of the polled merchants said that they had registered a rise in their customer conver-sion rates following the introduction of credit card acceptance. Merchants offering credit cards also said they had noticed a drop in the number of aborted transactions. “It is again evident from a merchant per-spective that – also when taking the number of cases into account – the greatest benefit merchants enjoyed from introducing the methods ‘PayPal’, ‘payment on invoice’ and ‘credit card payments’ was a

3P.O.S. – Special Edition April 2012

reduction in the number of aborted transactions,” was one of the conclusions the IZH6 survey arrived at.

Methods: choice of security measures

In responding to the survey’s question on which risk management instruments they deploy, merchants quoted a large number of procedures which are also integrated into credit card acceptance. Checking the plau-sibility of bank accounts and card numbers, as well as the verification of postal and IP addresses and customer solvency checks are all examples of attributes closely linked to credit card acceptance. Issuing banks, for example, already check a cardholder’s credit worthiness upon application for the credit card.

When it comes to the use of various risk management instruments, the study estab-lished merchants’ willingness to pay a pre-mium of just under three percent of turn-over in exchange for 100 percent payment certainty. Furthermore, the incentive to use additional security measures lay not only in improving overall payment security levels, but also in boosting the efficiency of the acceptance outlet’s own business processes.

Networked: optimal partners for secure payments

A real-life example demonstrates just how efficiently merchants and PSPs can jointly combat bad debts and fraud. ALTERNATE GmbH, which is based in Linden in the regional state of Hesse, is one of the lead-ing online suppliers of hardware, software and home and consumer electronics. With its ALTERNATE B2B division, the company also offers an extensive business service to commercial consumers and public institu-tions. Each day, up to 10,000 parcels are dispatched from the firm’s logistics facility. Customers can, amongst others, use Visa and MasterCard to pay for orders placed at the online shop. ALTERNATE concluded its card acceptance agreement with Postbank P.O.S. Transact. “Our business is a prime

focal area of organized fraud,” explains Björn Momberger, Director Sales B2B at ALTERNATE. “Certain product groups are simply more suitable for resale, with com-puter hardware at the high end of the league. Swindlers react quickly to new security measures and adapt their fraud patterns accordingly. We work preventively to avoid a defaulted debt from the very start. Post-bank P.O.S. Transact is the ideal partner for us in this area.” Mr. Momberger and his colleagues take a detailed look into every-thing they do: they check orders for specific order patterns, verify delivery addresses and define conditions beforehand which will disqualify a delivery. “A differing delivery

address, for example, will set our alarm bells ringing.” “Efficient fraud prevention must be able to recognize and counter fraudsters’ trends quickly,” explains Postbank P.O.S. Transact GmbH security expert and senior risk manager, Manfred Welter. “Very few companies already invest adequate in-house resources to continually minimize payment fraud,” he remarks. ALTERNATE’s commit-ment is exemplary and is backed up by Postbank P.O.S. Transact GmbH’s proActive security solution. Together, the newly developed features succeed in protecting 5-digit euro amounts against fraudulent activities every month.

Discreet: a one-of-a-kind fraud prevention system

Postbank P.O.S. Transact GmbH’s proActive fraud prevention system offers a wealth of functions including realtime authorization monitoring. This means that defined rules are applied interactively while the payment transactions are being approved. If the system registers a rule violation – such as excessive order amounts, cards issued in specific countries, or temporally conspicuous card usage – the Fraud Investigation Team will be alerted. Automatic case creation which is integrated into these rules generated potential fraud cases. Should a suspicion arise, the merchant will be informed about the suspect transactions. In compliance with the most stringent data protection guide-lines, the team will then contact the card-holder’s bank with the request to contact the actual cardholder directly. In this way, the bank should be able to establish whether the cardholder did actually effect the transaction or whether a fraudulent transaction was involved. Regardless of whether the card-holder denies or confirms having effected the transaction, the bank refers this infor-mation back to the Fraud Investigation Team. This information is also very important for continually improving the system’s fraud recognition capabilities. Upon receiving the information, the team refers it immediately to the merchant who will then arrange for an appropriate refund or for delivery of the goods. “In this way, a chargeback can be avoided, the goods are not lost, and neither the merchant nor the regular cardholder suffers any damage,” Mr. Welter explains. The card number is then added to a blacklist, should an attempt be made to use it fraud-ulently again in the future. The fraud analyst uses this experience to recognize potential new fraud patterns and to create new rules which are integrated into the real-time fraud prevention system. Simulating new rules provides decisive help. “Too many rules can also trigger so-called false negatives, hinder-ing legitimate turnover that has nothing to do with fraud,” says ALTERNATE Business Service’s Björn Momberger. “That’s some-thing we naturally wish to avoid.” Manfred Welter, too, sees an advantage here for pro-Active: “There are no fully automatic security systems which fulfill the merchants’ needs. Ultimately, it’s our team’s know-how and ex-perience that are decisive. We have to keep an eye on our merchants’ interests, while at the same time offering them maximum possible security. Our customers’ fraud-protected sales figures corroborate the success of this security strategy,” Mr. Welter continues.

“Too many rules can also

trigger so-called false

negatives, hindering

legitimate turnover that

has nothing to do with

fraud!”

4 P.O.S. – Special Edition April 2012

Weitere Infos unter www.postransact.de

responsibility in the card based payment sector

“ALTERNATE addressed the issue of online payments at an early stage to offer its retail and business customer the largest possible choice of payment options as well. Because we offer our goods across Europe, issues

such as payment security and international acceptance are of utmost importance. When we introduced the option of credit card payments in our webshops, we found Postbank P.O.S. Transact to be a partner that gave us the necessary advice and support. In the meantime, this successful collaboration has become all the more valuable to us, given the growth in credit cards’ popularity as a payment method for online transactions. The same applies to the business sector: especially small and mid-market companies have come to appreciate the credit card as a quick, flexible and safe payment method.”

Björn Momberger, Director Sales B2B ALTERNATE GmbH, Linden

“It makes sense to engage a single service provider with providing all the services associated with card acceptance. It means that you have a single contact and single support center.

We deliberately chose Postbank P.O.S. Transact because it offers a one-stop ser-vice, and at a fair price to boot. Not least, its risk management services are also very convincing: it deploys a fraud prevention system that monitors transactions for conspicuities, already during authorization.

This service is of elementary importance for our online shop because you can never entirely rule out fraudulent card usage.”

Martina Morgan, proprietress of lifestyle and home-ambience shop “The Good, the True and the Beautiful” in Niddatal, Hessen

“Thanks to our cooperation with Postbank P.O.S. Transact, we will continue to be able to handle the permanently growing numbers of customers optimally in future and be

positioned to fulfill international demands and provide safe and effective payment processes.”

Ulf Gedamke, Head of Asset & Finance Management airberlin, Berlin

“The most prominent feature of Postbank P.O.S. Transact’s service is its totally uncom-plicated, quick and secure payment pro-cessing. I think that’s also an important consideration for customers wishing to pay by credit card. Buy... pay.. finished! The company provided for the quick integration of its offered payment methods and we haven’t had a single problem or outage to date. Bad debts are a key factor in e-com-merce and can cause a company significant damage. We therefore like to play it safe – both for ourselves and our customers – and have been using 3D Secure (MasterCard SecureCode and Verified by Visa) for credit card payments since we launched our shop.

In this connection, Postbank P.O.S. Transact GmbH supported us whenever we needed assistance. Our contacts are always available and any questions that arise are answered immediately. Postbank stands for trust – the reason why we chose that bank and Post-bank P.O.S. Transact GmbH as our payment service provider for card-based payments.”

Nicole Schumacher, Country Manager Germany YOMOY.de

Contacts!

Please call us if you’d like further information on card based payments. We’re looking forward to your call!

Postbank Service Kartenakzeptanz90314 Nürnberg

Tel: +49 (0) 180 4 – 76 74 357* Fax: +49 (0) 180 4 – 76 73 29*

* (0,20 per call/fax from the German fixed line network, max. 0,42 per minute from a German mobile network)

E-Mail: service@postransact.dewww.postransact.de

Masthead

Issued by: Postbank P.O.S. Transact GmbH

V.i.S.d.P.: Nina Osterheider

Editing, concept and design: [dialo:k], Münzenberg

Print: Medienhaus Zarbock, Frankfurt

Photos Cover: Ivy Close Images / Alamy; Page 2: Aintschie - Fotolia.com; Page 4: ALTERNATE GmbH, Martina Morgan, airberlin AG, CoolStuff AB

Articles may only be reprinted with details of the source, following submission of a specimen copy and with express written permission.