Programmable financial services company Stripe is expanding Radar, its AI-powered fraud prevention product, to cover ACH and SEPA payments.
The Radar expansion comes after Stripe saw a 40 per cent increase in noncard payment volume. While many noncard payment methods have lower fraud rates than cards, they also introduce new fraud challenges, meaning businesses are increasingly open to new risks.
Bank debits often have a longer settlement period compared to cards (up to four days). This means a business takes on the risk of failed bank payments, as well as increased potential for lost revenue, if they deliver goods and services to their customers before the transaction has settled.
Because bank debits have an extended settlement time, signals like the immediate confirmation that a payment has succeeded, which helps to predict card fraud, aren’t available right away. Recognising this challenge, Stripe applied the same AI architecture that Radar uses for cards to new AI models that automatically screen and help block risky ACH and SEPA transactions.
Radar assesses over 1,000 characteristics of a potential transaction to quickly determine the likelihood that it’s fraudulent. On average, Radar users see a 42 per cent reduction in SEPA fraud and a 20 per cent reduction in ACH fraud.
Ben Winfield, Radar product manager at Stripe, said: “Over the last year, we’ve seen a 40 per cent increase in noncard payment volume on Stripe. Now, we’re extending Radar fraud protection to ACH and SEPA payments. We’ve applied the same AI architecture Radar uses for cards to new models that automatically screen and help block risky ACH and SEPA transactions.”
With Radar for Fraud Teams, businesses will be able to create custom rules based on payment method type with new attributes tailored to ACH and SEPA. They can also use payment method attributes to customise default ‘block’ and ‘allow’ lists, and tailor their risk threshold for cards, ACH, or SEPA.
