Partner Transaction Monitoring Best Practices
Our technology and architecture use hundreds of different data sources to manage risk at both the portfolio and account levels and to drive real-time decisions for transaction monitoring. For Partners who have elected to manage their own transaction monitoring, we advise the following considerations.
To minimize potential transaction risks, Partners should use the following criteria to monitor transactions from merchants in real time:
Create a blocked list of suspected bad sign-ups and an allowed list of VIP, fully verified sellers, and ensure new merchants are cross-referenced against the list.
Analyze the risk by checking the seller’s ID, performance, chargeback rates, suspicious behavior, abrupt changes in the activity, credit card AVS mismatch, zip code to address mismatch, and so on.
Measure the risk periodically via key performance indicators (KPIs), which should include constantly monitoring fraudulent cases and rates of Chargebacks and ACH returns.
For additional transaction monitoring information, see the Merchant Monitoring Risk Guide.
Recommended Monitoring Rules
The Payrix Pro platform enables many transaction monitoring options that can be configured to suit each unique business case.
These specific monitoring rules should be applied to help maintain compliance and support observations of any suspicious transaction activity:
Card Security and Address Checks: Monitors card CVV and billing address AVS checks for transactions.
Daily Disbursement Amounts: Monitors the amount disbursed to an entity daily.
Daily or Monthly Processing Limits: Monitors the amounts processed against the limit set for daily and monthly totals.
Decline Frequency: Monitors the number of declines and how frequently they occur.
Duplicative Use of Cards: Monitors use of cards for duplicate transactions.
Maximum Refunds: Monitors the number of full refunds issued from the merchant.
Non-offsetting Refunds: Monitors occurrences of refunds being issued where offsetting transaction funds are not available for the merchant.
Transaction Amounts: Monitors transaction amount totals.
Velocity Checks: Monitors the average number of transactions being processed.
Recommended Monitoring Activities
Along with automated and tailored monitoring rules, certain manual monitoring activities can be done to identify certain types of transaction risk.
When monitoring transactions for potential risk, look for these types of activity trends:
BIN Concentration: Triggered by a large influx of transactions via a single BIN.
Card Testing: Triggered by imitation transactions to test card validity characterized by high velocity of transactions, made with credit cards in non-geographic locations.
Chargeback and Return Rates: Triggered by high amounts of chargebacks and returns under a merchant.
Explosive Growth/Bust Out: Triggered by an unusually large influx of transactions overall compared to previous averages for the merchant.
Reactivate after Inactive Period: Triggered by merchants that have been dormant or inactive for an extended period, indicating potential account takeover (ATO).