The mobile payments company Fortumo is today publishing its carrier billing risk management guide for mobile operators. This guide allows carriers to get a better understanding on how to monitor payment traffic for fraudulent activity and mitigate risk of bad debt by managing user spend limits while encouraging spending from legitimate users. The guide is available to carriers for free on SlideShare.
“App stores and digital companies are adopting carrier billing at an increasing rate and the global volumes have grown bigger than ever before. The flipside of this is that fraudsters also try to exploit carrier billing more, increasing bad debt and impacting the business model. The question becomes how to undermine fraud while making sure regular users would not suffer. Our guide is intended to provide actionable guidance for mobile operators on the topic,” said Gerri Kodres, Chief Business Officer at Fortumo.
Fortumo recommends carriers to approach risk mitigation from two angles. First, each carrier billing transaction should be evaluated by an automatic risk scoring engine which assesses whether a transaction seems fraudulent, i.e. whether it should be processed or not. Second, setting custom spending limits to users based on their risk score and dynamically modifying these spending limits helps lower the likelihood of bad debt.
At the same time, Fortumo urges carriers not to exaggerate with fraud management, resulting in legitimate users being unable to spend. “We have seen instances where users with a low risk score are unable to make payments due to incorrectly configured spend limits. Proper risk management deals with the threats without compromising revenue generation abilities,” added Gerri Kodres.
Risk management for carrier billing works in combination of input from carriers (subscriber identity, account age, subscriber group, provisioning status, past record), payment service providers like Fortumo (high-level market data, payment history of each subscriber, IP, cookie and geolocation information) and merchants (merchant-specific user identity and behavior information). As a combination of these criteria, individual transactions can be assessed as well as spending limits applied to specific users and user groups.
Managing risk helps carriers avoid situations where their subscribers encounter bill shock (realizing they have made more purchases than they expected). This in turn reduces customer complaints, chargeback request as well as potential issues with regulators. Having a proper risk management solution in place helps carriers increase their revenue (enabling higher spending limits and allowing transactions from low-risk, high-spending users) while minimizing revenue losses (reduced amount of fraudulent payments and bad debt).
Fortumo has previously made available to carriers its analytics platform Fortumo Insight which can be used to assess user activation, spending patterns and effectiveness of marketing campaigns related to carrier billing. The company’s new guide helps carriers decode the data available to them from a risk management perspective and for example assess how spending limits for different subscriber groups should be set up.