Recently, Visa Europe organized its first Visa Europe Acceptance Risk Forum, in order to help establishing a solid community where acquirers and PSPs, regulatory bodies, law enforcement agencies and non-governmental organizations share non-competitive information and issues for the mutual benefit of the global acquiring and payments ecosystem. Speakers and attendees gathered together in London on 23rd & 24th October, and held extensive discussions on relevant topics related to acceptance risks issues or threats observed in merchants’ behavior, offering a balanced and accurate picture of the payments industry and of the acceptance risks, from a business and regulatory perspective.
Besides the traditional credit and fraud risks, the rapid evolution of ecommerce and the new technologies exposed everyone to newer types of risks such as acceptance risk. Andrew Mulvenna, Head of Acceptance and Third Party Risk at Visa Europe, defined acceptance risk as: “those risks payment providers and acquirers incur as a result of the behavior and practices of merchants”. The negative impact on the brand reputation of such risks is considered to be fatal for the consumers’ trust, and implicitly for businesses’.
On behalf of Payvision, I spoke about the new European legislative initiatives and their impact on ecommerce. I talked about the Proposal for a revised Payment Services Directive (PSD2), Proposal for EU Regulation on interchange fees for card-based payment transactions, Proposal for a Fourth Anti-Money Laundering Directive, and the Proposal for Regulation on Data Protection.
Other speakers shared with the participants some of the lessons learned during the past years, after experiencing different risk cases, data breaching or criminal attacks. Such lessons were:
- Adopt a “compliance & risk” mentality throughout the entire company, no matter how time consuming and effortful this may be
- Communication is key – stay connected with the card schemes, work closely with them and the clients
- Update your business models, invest in innovation, try to stay ahead of the game
- There is no “plug & play” strategy in the acquiring arena, there are too many factors to control in order to prevent risk, so take the time to analyze in detail each aspect of your merchants’ businesses.
- A very common-sense lesson, but many times forgotten, is that one should not accept more risk than one can handle.
- From the acquirers and PSPs side, there is a clear need for enhanced due diligence when it comes to boarding merchants and managing a merchant portfolio, as it is commonly agreed that one cannot control fraud by himself, and merchants have to manage carefully assets and be educated on the risks they are exposed to.
The conclusion? As Diana Carrasco, Lead Acceptance Risk Visa Europe, suggested “it’s time to change – ecommerce is changing, payments industry is changing, so if we, as experts in this field, want to lead this business we have to change our behavior too”.