Darryl Cumming

With a wave of new regulations coming in from Washington DC, the businesses of ISOs, merchants and other leading payments providers stand to incur an extensive impact on their operations. 

These shifts require providers to not only examine the latest fraud detection opportunities in far greater depth, but also place a far more critical importance on fraud prevention, across the whole industry. 

NMI’s advice for payment providers

In this ever-evolving field, navigating the regulatory changes and increasing liability is no mean feat. 

“The metaphors I like to use are tiles in the mosaic, or trees in the forest. You have to look at all these cases, and try to string them all together,” explains Scott Talbott, Senior Vice President of Government Affairs, ETA. 

One of the key takeaways is understanding what the regulators are looking for. These are the red flags, and the lessons to be learned here are pinpointing the things that are wrong with the application or behaviour, which don't seem to make sense. 

“Now, any one of these in and of itself is not dispositive. But, when you add them all together and create that mosaic, this is where the regulators will hone in.”

Then, it is a case of being careful not to onboard – or continue to keep on board – any merchants who engage in that type of behaviour. In short, if you understand what the red flags are that regulators are looking for, you can keep yourself ahead of the regulations curve.

“At NMI, our focus is very much on helping to automate as many of these initial early warning indicators as possible. We want to help your risk analysts focus on the items that really require their true expertise and attention, after it has been initially flagged,” outlines Darryl Cumming, Director of Product Management at NMI. 

“The enhanced due diligence process is manual and labour-intensive. I mean, there's no way around that. Our mission and our goal is to help automate the easier parts of that, to help your team and your experts focus where their attention is needed. Staying on top of both what the regulatory bodies and what the fraudsters are doing is a full-time job, for numerous, numerous people. So, I highly recommend (in addition to documenting your policy) going through those underwriting guidelines, to make sure you have something in place that will help you carry that load.”

Undoubtedly, it’s a complicated, multi-faceted and ever-shifting situation. But, by implementing these measures and remaining diligent, payment providers can successfully keep one step ahead of both regulations and fraudsters alike. 

“There's a lot going on – it's a very daunting situation. It's not simple – it's manual, it's labour-intensive, and there's a plethora of reasons why you might want to put merchants in your portfolio under more rigorous review processes, even if it's only a temporary measure,” says Cumming. 

“Make sure that you have the procedures and policy in place to act on that. Check that you have an understood risk guideline that covers, not just your risk underwriting and initial merchant onboarding decisions, but goes all the way through to your risk and fraud monitoring teams as well. It's critical that everyone is working in lockstep, understands what your policies are, and is able to pivot – because it's always changing,”

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