Apple eschewed banks for a retailer focus onstage at their Worldwide Developers Conference (WWDC) when it spoke to payments. I sense this is an intentional shift – now that stateside, you have support from all four networks and all the major issuers – Apple understands that it needs to shift the focus on signing up more merchants, and everything we heard drove home that note. That includes Square’s support for NFC, as well as the announcements around Kohls, JCPenney and BJ’s. MasterCard's Digital Enablement Service (MDES) - opposite Visa’s Token Service - is the tokenization service that has enabled these partnerships specifically through MasterCard’s partners such as Synchrony – (former GE Capital) which brought on JCPenney, Alliance Data which brought on BJ’s, and CapitalOne which enabled Kohls. Within payments common sense questions such as: “Why isn’t NFC just another radio that transmits payment info?” or “Why aren’t retailer friendly payment choices using NFC?” have been met with contemptuous stares. As I have written umpteen times (here), payments has been a source of misalignment between merchants and banks. Thus – conversations that hinged on NFC have been a non-starter, for a merchant that views it as more than a radio – and instead, as a trojan horse for Visa/MA bearing higher costs. When Android opened up access to NFC through Host Card Emulation (HCE) and networks supported it through tokenization, merchants had a legitimate pathway to getting Private label cards on NFC. So far, very few indeed have done that (Tim Hortons is the best example). But between the top two department store chains (Macy’s and Kohls) – we have a thawing of said position, to begin to view technologies pragmatically and without morbid fear. It must be said that Google is clearly chasing Apple on the retailer front, and Apple is doing all that it can, to dig a wider moat by emphasizing privacy and transparency in its cause. It is proving to be quite effective, and Google will have to “apologize beforehand” prior to any merchant agreement – especially now that retailers have control over which wallets they want to work with – and how. This control inherits from the structures set alongside the Visa and MasterCard tokenization agreements – and retailers with co-brand/private label cards can lean on them through their bank partners. Thus, Google has to focus on two fronts – first to incentivize merchants to partner so that they bring their cards to Android Pay, while trying to navigate through the turbulence Apple has left in its wake, untangling the “customer privacy” knot. For merchants, at the end of the day, the questions that remain are about operating costs, and control. Does participation in MDES and VEDP tokenization services through bank partners, infer a higher cost for play – for private label cards? I doubt if Apple’s 15bps “skim off the top” revenue play translates to Private Label, especially when Apple’s fee is tied to “Fraud Protection” and Fraud in Private Label is non-existent due to its closed loop nature. Still – there could be an acquisitions cost, or Apple may plan a long game. Further, when you look at token issuance and lifecycle management costs, they aren’t trivial when you take in to context the size of portfolio for some of these merchants. That said, Kohls participation affords some clarity to all. Second, Merchants want to bring payments inside apps – just like they are able to do so through in-app payments in mobile, or on online. Forcing consumers through a Wallet app – is counter to that intent, and undesirable in the long scheme. Loyalty as a construct is tangled up in payments today – and merchants who have achieved a clean separation (very few) or can afford to avoid it (those with large Private label portfolios that are really ‘loyalty programs w/ payments tacked on’) – benefit for now. But soon, they will need to fold in the payment interaction in to their app, or Apple must streamline the clunky swap. The auto-prompt of rewards cards in Wallet is a good step, but that feels more like jerry rigging vs the correct approach. Wallet still feels very v1.5 from a merchant integration point of view. Wallet not Passbook. Finally, Apple branding Passbook to Wallet is a subtle and yet important step. A “bank wallet” or a “Credit Union wallet” is a misnomer. No one bank can hope to build a wallet – because my payment choices aren’t confined to a single bank. And even where banks have promoted “open wallets” and incentivized peers to participate – response has been crickets at best. On the flip side, an ecosystem player that touches more than a device, a handful of experiential services in entertainment and commerce, a million and a half apps – all with an underpinning of identity, can call itself a true wallet – because they are solving for the complete definition of that term vs pieces of what constitutes it. Thus – Google & Apple. So the re-branding while being inevitable, finds a firm footing in payments, looks toward loyalty and what lies beyond. Solving for those challenges has less to do with getting there first, but putting the right pieces in play. And Apple’s emphasis (or posturing – depending on who you listen to) on privacy has its roots in what Apple wants to become, and access, and store on our behalf. Being the custodian of a bank issued identity is one thing. Being a responsible custodian for consumer’s digital health, behavior and identity trifecta has never been entirely attempted. It requires pushing on all fronts, and a careful articulation of Apple’s purpose to the public must be preceded by the conviction found in such emphasis/posturing. Make sure to read our perspective paper to see why emerging channels call for advanced fraud identification techniques

According to the latest Experian-Oliver Wyman Market Intelligence Report, HELOC originations increased 21% year over year, moving from $25.6 billion in Q1 2014 to $31 billion in Q1 2015.

According to Experian’s latest State of the Automotive Finance Market report, auto loan balances reached an all-time high of $905 billion in the first quarter of 2015.

Utilities have continued to evolve and are making better, faster decisions about customers signing up for new services.  A combination of best practices with respect to data, analytics and technology is driving efficiency, lowering costs and ensuring all customers are treated equally.  We will discuss three main areas where utilities have made significant advances: • Customer pinning — loss reduction by using match logic to identify consumers across different systems and platforms who may have existing past due amounts • Scoring — using specific models for risk segmentation to assist in the deposit decision • Decisioning — choosing systems with capabilities for effectively managing their business at the relationship level and is capable of using “pins” to automatically identifying customers who have  past due amounts and using scores and other data to automate the deposit decision Customer Pinning Using customer pins in the account opening process is key to ensuring you are able to effectively identify consumers who are re-initiating service and may have unpaid balances. This enables you to identify the opportunity to consolidate past-due amounts before connecting new service for the consumer.  It may also be used in the determination as to whether or not a deposit may be required. Clients see advantages with this process most often when consumers move out of and then back into a particular service market.  Another case is when a customer changes their name as a result of marriage or divorce or is added to other existing billings. These customer pins or unique identifiers can be updated in batch in order to maintain the integrity of the account linking within your accounts receivable. Clients then ensure that with the account opening process the pin on the customer opening the account is retrieved from the consumer credit file system, then “matched” with a pin in the existing customer file that was obtained through the batch process.  It can then be determined whether that customer owes an unpaid balance from a prior account.  For optimal efficiency, this should be done by the same decisioning system that is performing the identity verification and deposit calculation for the account in a continuous workflow. Scoring and Deposits Increasingly, utilities are being authorized to use scores and credit data along with existing unpaid balances to determine if a deposit is warranted.  If a score is used, generally a simple cut-off is used and if a score falls below the cut off a deposit is required, otherwise it is not. There are many types of scores in the market, but some have been developed specifically for use by energy utilities and similar service providers for the purpose of deposit determination.  One of the characteristics to look for in a score for deposit determinations is the number of customers that can be scored.  Generally, the more customers that can be scored the better as there may be many customers with thin or virtually no credit files that would be unscoreable using a traditional scoring model. Specific bureau attributes may enhance this process when scores are near cut offs, especially if a score falls slightly below the cut off.  A decision engine may be able to use attributes to assist in supplying valuable data in a second review that may be requested by a customer who feels that they should not need to submit a deposit. Decisioning Platform Deploying new strategies to capture all the benefits of automating a fraud review, taking advantage of the custom pinning process, scoring and other attributes can be a challenge.  However, the market has continued to evolve to enable large and small utilities to gain access to new tools to more effectively manage their business. There are now new solutions available, like PowerCurve OnDemand, that provide hosted data integration, incorporation of your existing customer files including pin numbers, workflow, decisioning and a simple integration with your existing technologies at a low cost of entry.  Solutions like PowerCurve OnDemand combine ease of use, with powerful capabilities that are targeted to fit the needs of the utility industry. Learn more about how PowerCurve OnDemand can help your business.

Every time I turn on my television, look out my window or drive into the office, I always see hybrid or electric vehicles on the road. These days it seems like almost everyone is going green. With all the alternative-powered vehicles out there, you’d think that the market is simply booming, right? Would you believe me if I told you that the percentage of newly registered alternative-powered vehicles in 2014 actually declined from the previous year? It’s true. With this revelation, we actually took a deeper look into the alternative-powered vehicle market to see what else we can discover. Here’s what we found: Did you know that consumers who buy “Green” vehicles, purchase them in cash at a higher rate than those that buy more traditional models? Again, it’s a fact. The point is, there are many stereotypes and misnomers about alternative-powered vehicles, as well as the consumers who purchase them. But, just as there are hundreds of stereotypes, there also is an abundance of data to help confirm or reject them. At Experian, we’re committed to using our data for good by providing information into the market to help dealers, manufacturers and consumers better understand the environment we live in – whether we are talking broadly about what metal is moving or more specifically providing actionable insights into who is “going green”. For instance, consumers purchasing an alternative-powered vehicle tend to be a lower credit risk than those purchasing a traditional model. Nearly 83 percent of consumers who purchased a “Green” vehicle fell within the prime credit category, while the same could only be said for 71.5 percent of consumers who purchased gas-powered models. Additionally, of the top five alternative-powered vehicle models in 2014, three of them came from the Toyota family. The Toyota Prius and Prius C were in the top two, while the Camry was in the number four position. The Ford Fusion and Nissan Leaf made up the third and fifth spots, respectively. It’s these insights that enable the automotive industry and its consumers to take the appropriate action and make the best decisions for them. For consumers, gaining insight into the market allows them to paint a clearer picture of what options are most popular and available. For dealers and manufacturers, they are able to gain a better understanding of consumer demand and provide inventory that meets the needs of the market. The fact of the matter is, opportunity exists everywhere you look, you just have to know what you’re looking for. You can’t let preconceived notions or ideas dictate future decisions. By leveraging data and insight, the automotive industry is able uncover the unknowns and put itself in a good position to succeed, while helping consumers purchase vehicles that meet their specific lifestyle.

A recent Experian Automotive analysis found that consumers who purchased an alternative-powered vehicle did not just go Green by cutting back on fuel; they also used more green (cash) to purchase it.

Data migrations are very common in today’s business environment. A recent Experian Data Quality study found that while 91% of businesses engage in data migrations, 85% encounter significant challenges.

Fraud Prevention: Gaining insight fraud throughout the customer lifecycle & future trends Earlier this week, I had the pleasure of chairing the annual Grad School session during CNP Expo 2015. The group was energized by the participation of the attendees and we hope that all gained insight into issues regarding fraud throughout the customer lifecycle as well as future trends in payments, identity and cross border growth. For those who were unable to join us in Orlando, the CNP Expo Grad School focused on the importance of creating a comprehensive fraud strategy to protect your organization throughout the customer lifecycle. To help articulate the varied fraud challenges posed at each stage, we brought an esteemed group of fraud experts, who collectively have served in the industry for over 100 years. We kicked off Grad School with Lawrence Baldwin, CIO of myNetWatchman. He described how fraudsters can transform low value credentials, which can be purchased on the black market for fractions of a cent, into high-value validated credentials that facilitate burgeoning Account Takeover attacks. Jeramie Driessen, a Sr. Risk Analyst in Experian’s Fraud and ID group, then delved into the challenges merchants need to address when evaluating new account opening for merchants and card issuers. Yours truly covered the various stages of Account Takeover and described the evolving fraud vectors that are targeting existing accounts. During part two of the three-hour Grad School, Angela Montoya, Product Management Analyst for Experian Fraud and ID, and David Stewart, Manager of Corporate Security at Virgin America, shared their insights about transaction fraud and dived deep into the nuances of sniffing out crime rings and setting up new fraud teams. We ended with Dan Elvester, Sr. Director of Business Development at Experian, sharing facts and market trends around ecommerce growth, cross-border expansion and emerging fraud tools just before Cherian Abraham, Sr. Consultant with Experian’s Global Consulting Practice, covered advanced topics regarding Apple Pay, Tokenization and the future of Identity Verification. Overall, the CNP Expo 2015 Grad School reinforced our central theme of creating a multi-layered fraud strategy that places controls not just on the monetary transactions executed on your website but also on the account management, origination and even acquisition phases of your customers’ lifecycle. Thanks again to our speakers and attendees for your engagement and interest in Experian’s ongoing efforts to stop fraud. To follow along the topics that were covered a copy of our grad school presentation can be viewed here:

Credit card declines Surag Patel, vice president of global product management for 41st Parameter, led a panel discussion on Digital Consumer Trust with experts from the merchant community and financial services industry at this week’s CNP Expo. During the hour-long session, the expert panel – which included Patel, Jeff Muschick of MasterCard and TJ Horan from FICO – discussed primary research explaining the $40 billion in revenue lost each year to unwarranted CNP credit card declines and what businesses can do to avoid it. Patel began the Thursday morning session by asking the audience how many have bought something online—of course, everyone raised their hands. He then asked how many had been declined—about half the hands stayed up. “Of those with your hands still up,” he said, “how many of you are fraudsters?” The audience chuckled, but the reality of false positives and unnecessary declines is no laughing matter. Unnecessary declines cause lost revenue and damage the customer relationship with merchants, banks and card issuers. The panel cited a 41st Parameter survey of 1,000 consumers and described their responses to the question, what do you do after you get declined? While many would call the card issuer or try a different payment method, one in six would actually skip the purchase altogether, one in ten would purchase from a different online merchant, and one in twelve would go buy the item at a brick-and-mortar store. So regardless of who the customer blames, ultimately, when a good purchase is declined, everybody loses. Jeff Muschick, who works in fraud solutions for MasterCard, spoke about the need for a solid rules engine, and recommended embracing new tools as they emerge to enhance their fraud prevention strategy. He acknowledged that for smaller merchants, keeping up with fraudsters can be incredibly taxing, and often even at larger organizations, fraud departments are understaffed. For that reason, he highlighted a tool that many fraud prevention strategies are leaving on the table, and that’s cooperation: “We talk about collaboration, but it’s not as gregarious as we’d like it to be.” TJ Horan, who is responsible for fraud solutions at FICO, encouraged merchants, banks, and card issuers to mitigate the damage of good declines through customer education. He observed that “if there was a positive thing to come out of the Target breach (and that’s a big ‘if’), it is an increase in general consumer awareness of credit-card fraud and data protection.” This helps inform customers’ attitudes when they are declined, because they realize it is probably a measure being taken for their own protection, and they are likely to be more forgiving. Click here for more information about TrustInsight and how online merchants can increase sales by approving more trusted transactions.

Recently, I sat down to answer three questions for “The Year of Payments - 2015: One Quarter in” for PYMNTS.com on the topic of mobile payments in regards to: How Q1 2015 is different than Q1 2014 What’s the most significant development so far this year? If “Payments 2015” were a brand and had a tagline, what would it be and why? A significant factor in shaping the next frontier in fraud management is the continued rapid growth in online and mobile payments as the preferred methods of doing business for many consumers. With more than a third of customers interacting with a single business in five or more channels and more than 85 percent of consumers using online or mobile to conduct business, the need for omnichannel fraud prevention becomes a requirement. These trends make mobile-device intelligence as important to the authentication process as traditional personally identifiable information. As a result, the need to integrate device intelligence into the authentication process to associate a consumer to a known device is critical. Companies already are beginning to incorporate device intelligence into their authentication strategies. The ability to verify a customer through his or her device is a huge benefit to the overall customer experience and not only makes it easier for the customer to do business with you, but also adds an additional layer of validation. The challenge with any new emerging business or new technology is maintaining a frictionless customer experience foremost because fraudsters are always the early adopters. Make sure to read our perspective paper to see why emerging channels call for advanced fraud identification techniques and what myself and other industry leaders had to say on the topic of mobile payments:

Mortgage originations kicked off Q1 2015 with a 25% year over year increase to $315 billion.

At the start of the Vision 2015 Conference, Experian® announced a new dedicated enterprise Fraud and ID business in North America. This newly established business unit allows Experian, the leading global information services company, to more aggressively address the growing variety of fraud risk and identity management challenges businesses, financial institutions and government agencies face. “The rapid progression of wide-scale fraud and data breaches have led to a significant increase in identity theft related risk, and potential fraud losses on a larger scale than ever anticipated,” said Charles Chung, president of Decision Analytics, Experian North America. “For nearly two decades, we have been helping clients solve the difficult and ever-changing problems of fraud detection and identity management. Our core expertise was further enhanced by the recent acquisition of 41st Parameter which added device identification as another important layer of sophistication to our suite of fraud detection tools. Now the creation of a new fraud business unit brings all components of our Fraud and ID services together to better serve all markets through our innovative authentication techniques, advanced analytics and Big Data insights.” Having one comprehensive operation allows Experian to deliver greater value across its various addressable markets through customized approaches that balance privacy, security and compliance requirements with client reputation, customer experience, convenience and efficiency. The integration brings together a wide set of enterprise services ranging from identity and device risk assessment and anti–money laundering to consumer identity monitoring and alerts, letting Experian continue to proactively meet client needs surrounding the complex risks they face. Dr. Jon Jones has been appointed to lead the new business unit as senior vice president and general manager of Fraud and ID for Experian North America. “Data security and fraud management affect many industries as identity data has become so compromised that authenticating consumers through traditional means is not enough to safeguard against fraud. Modern fraud risks now absolutely require Big Data assets and the proven ability to derive predictive analytical capabilities to meet these challenges,” said Jones. “Today, online and mobile commerce, and customer demands for convenience and speed are intersecting with the increasing sophistication of criminal fraud networks. Experian’s new integrated fraud business delivers next-generation holistic fraud management services, leveraging our vast data landscape to identify customers’ risk for fraud even when no threat has been detected to stay ahead of the growing market demands.” Accounting for the real risk of identity compromise over time continues with the launch of Experian’s Identity Element NetworkSM which identifies real-time fraud volume and velocity linkages across multiple industries to predict when consumers are showing risk of identity compromise. Experian monitors and predicts when seemingly random identity element linkages become meaningful risk clusters, including: When an identity likely has been compromised When an identity is victim of a data breach When a transaction is part of an identity theft scheme, particularly an account takeover When consumers’ identities are exhibiting identity theft, visible by monitoring a broad portfolio of breached or compromised consumers "Cybercriminals continue to rapidly escalate their assault on sensitive data across a variety of industries, with no end in sight," said Julie Conroy, research director at Aite Group.  "This requires fraud prevention capabilities to undergo a similar rapid evolution, with a new, more advanced approach to identity management sitting squarely in the middle of risk mitigation. Simple personally identifiable information is no longer enough to verify identity; the next wave of fraud and cybersecurity services needs to employ robust data and advanced analytical capabilities in order to make faster and more informed identity decisions." Experian’s Identity Element Network service can be utilized through its flagship fraud enterprise platform, Precise ID®, using its data assets and analytics alongside 41st Parameter’s FraudNet to deliver a comprehensive view of the Customer Life Cycle of traditional identity, device confidence and risk assessment. Learn more about Experian’s Big Data fraud service for breach identity compromise detection for your business.

According to a recent Experian Marketing Services study, informational or "thanks for joining" messages drive significantly higher open and transaction rates than promotional emails, as well as higher revenue per email.

In today's data driven world, decisioning strategies can no longer be one-dimensional and only risk-focused. By employing a multidimensional decisioning approach, companies can deliver the products and services customers need and want.

Identity fraud and the utility industry In the utility industry today, gaining enterprise-wide systemic control over credit risk assessment, identity verification and compliance oversight are causing many leading organizations major headaches.   The ability for IT departments to modify their core legacy systems to effectively implement and support these critical functions is ever-challenging.  And for the business, the inability to gain real-time access and control to these functions means slower speed to market with automated risk controls, costing the organization (and therefore rate-paying customers) tens of millions in losses annually and lost productivity in manual reviews and call center costs.   In addition to the obvious financial impact, customer experience invariably suffers, negatively impacting those good paying, low-risk customers and leading to downstream issues with complaints to regulators. The ideal solution provides organizations the ability to quickly identify customers and compliance requirements, while maintaining a strong and transparent security posture for user authentication and strategic control over the complete customer life-cycle.   To minimize barriers to implementation, such a solution requires a flexible, user-friendly hosted platform incorporating all the various credit and alternate data sources with reporting and industry best practice strategies available “out of the box”. While there are several types of fraud perpetrated on utilities, one common form involves the opening of an account in a legitimate consumer’s or business’s name by a fraudulent party with the service address belonging to the fraudulent party (aka the “name game”). Utility fraud may take a long time to discover, as the fraudster may have a history of making some payment, but often times leaves the organization with a significant, unpaid balance.  Even after an account goes to collections for nonpayment, it can take a very long time before the fraud is confirmed.  Even if consumers and businesses periodically check their credit reports, they may not be aware that accounts had been opened in their name because the accounts usually aren’t reported until they reach collections. This means utility fraud through identity theft can lead to eroding customer relationships and losses. Best Practices for Customer Identity Verification An overall compliance or identity checking program will prevent fraud losses and increase customer satisfaction.  The same basic principles that apply to customer centric decisions apply here. gain knowledge of the customer through data, gain insight through specifically developed models and analytics, and make identity decisions using expert strategies. A best practice identity service will employ a customer acquisition platform like PowerCurve OnDemand to automatically acquire critical consumer and business identity authentication data, scores and analytics.  Models such as Precise ID and BizID allow clients to make decisions that are tailored to these specifications.  These results can be incorporated into automated accept or referral decisioning. Clients can customize these decision strategies for results based on the presence and absence of both positive and high-risk conditions. Specifically, the service helps clients to: Positively identify legitimate consumers Preserve positive consumer experiences by limiting or eliminating the need for more manual and arduous authentication processes that require more customer engagement and time Direct more intensive authentication procedures, such as knowledge-based authentication questions, only to the riskiest applicants or transactions Preserve positive customer experiences by preventing fraudulent accounts being opened in their name Detect potential fraud and reduce charge-offs FACTA and Red Flag Compliance Another advantage of using an acquisition platform like PowerCurve OnDemand is if the utility is obtaining consumer credit reports for other purposes, such as to determine a deposit amount, the platform can also perform many of the FACT Act and Red Flag checks that are required under the Fair Credit Reporting Act to limit identity theft as well.  So, at the same time, the platform can help meet compliance due-diligence requirements during application and account management processes. Matching Finally, the software platform may be able to perform a “matching process” on the applicant against existing or former customers.  If there is a match, this may also bring insight into whether or not an identity theft may be occurring. In Conclusion Consider a comprehensive platform that assists in identity verification process for both consumer and business accounts.  Ensure it can bring in world class data, models and analytics to gain insight on the identity of the consumer or business.  If applicable, leverage the platform for compliance related checks as well.  The rewards in lower write offs and increased customer satisfaction should yield great results.