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Market Research Report

Card-Not-Present Risk Management Across the Value Chain

Published by Mercator Advisory Group, Inc. Product code 231711
Published Content info 22 Pages
Delivery time: 1-2 business days
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Card-Not-Present Risk Management Across the Value Chain
Published: February 16, 2012 Content info: 22 Pages


Research Examines Collaboration in Card Fraud Countermeasures

Boston, MA -- Mercator Advisory Group's new report, Card-Not-Present Risk Management Across the Value Chain, examines strategies with which payment industry stakeholders might manage fraud risk in a more collaborative fashion across the value chain. To define the context for the report, the analysis begins with a look at the current dynamics in global e-commerce markets that are making adoption of collaborative strategies more imperative. Next, the discussion proceeds into current implementations of risk management practices within payment acquiring, online and multi-channel retail, and card issuing, as well as strategic concepts that may propel these practices into the next generation.

"Payment card risk management today exists in silos that correspond to each link in the transaction flow -- generally, the merchant, the acquirer, and the issuer (and its network partner). The various systems and processes that enable card transactions only talk to each other in limited ways; to a large degree, each party utilizes them only to manage its own risk. In other words, issuers, merchants, and acquirers concern themselves mostly with managing their own risk out of self-interest without much regard to risks posed to other members of the value chain," David Fish, senior analyst at Mercator Advisory Group and author of the report comments. "Mercator postulates that more collaborative use of risk management systems in payments would be of greater benefit to all involved, and thus the self-interest paradigm is actually a paradox."

Highlights of this report include:

An in depth analysis of the global growth of e-commerce and its implications for card risk management practices

Explanation of current risk procedures and duties associated with the various card payment value chain stakeholders

Coverage of instances where collaboration exists between stakeholder entities (both of the same type and of different types) in risk processes and practices

New criteria with which the payments industry should evaluate or build fraud prevention and risk management tools

Strategic considerations and action steps for risk managers in the payments industry and at CNP merchants


This report is 22 pages long and has seven exhibits and two tables.

Companies mentioned in this report include: 41st Parameter; Acculynk; Amazon; American Express; ChargeAnywhere; CyberSource; Ethoca; FICO; iovation; Kount; NICE Actimize; Retail Decisions; RoamPay; SecureKey; Square; ThreatMetrix; Visa.

Table of Contents

Table of Contents

Executive Summary


The E-Commerce Market (in the U.S. and Elsewhere)

  • U.S. Retail E-commerce Since the Recession
  • Delta: EMV + Global E-commerce Growth + CNP Fraud = Big Risk Management Challenge

Collaborative Management of Card-Not-Present Fraud Risk in the Transaction Process

  • Silos: The Same Old Story
  • New Fraud Performance Criteria
  • Digital Content: Real-Time Decisioning
  • From Layered to Interlocking Defenses
  • Mr. Gorbachev, Tear Down This Wall


  • Action Steps for CNP Merchants
  • Data Ownership, Privacy, and the Establishment of Use Cases
  • Acquirer Fraud Solutions: Rules Management Needs to Be Easy
  • "Card-Present" E-Commerce: Making Online PIN Debit (and Credit) Work
  • Card-Not-Present Risk Is a Systemwide Responsibility
  • Endnotes

Figures and Tables

  • Figure 1: Annual U.S. Retail E-commerce Sales, 2004 - 2015
  • Figure 2: Quarterly U.S. Retail E-commerce Sales, 2004 - 2011
  • Figure 3: Quarterly U.S. Retail E-commerce as a Percentage of Total Retail Sales, 2004 - 2011
  • Figure 4: Annual Global Retail E-commerce Sales, 2004 - 2013
  • Figure 5: Front-End / Back-End Transactional Risk Management Processes Are Not Collaborative Today
  • Table 1: Contextual Flexibility Required
  • Figure 6: Inverse Relationship of Delivery Expectations and Value
  • Table 2: Interlocking Defenses
  • Figure 7: CNP Risk Management Layers: Core Competencies of Value-Chain Players Are Synergistic
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