Balancing Risk and Return: Best Practices

in Merchant Onboarding and Monitoring

FEBRUARY 2017

Ron van Wezel

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Balancing Risk and Return: Best Practices in Merchant Onboarding and Monitoring FEBRUARY 2017

TABLE OF CONTENTS
IMPACT POINTS .............................................................................................................................................. 3
INTRODUCTION .............................................................................................................................................. 4
METHODOLOGY ........................................................................................................................................ 4
THE MARKET ................................................................................................................................................... 5
RISING CNP FRAUD ................................................................................................................................... 5
INCREASING COMPETITION AND COMMODIZATION IN ACQUIRING ....................................................... 6
INCREASING COMPLEXITY AND NEW CHANNELS ..................................................................................... 7
NEW RULES AND REGULATIONS ............................................................................................................... 8
MERCHANT ACQUIRING VALUE CHAIN ........................................................................................................ 10
MERCHANT ONBOARDING ........................................................................................................................... 11
ONBOARDING AND UNDERWRITING BEST PRACTICES ........................................................................... 11
IMPLEMENTATION .................................................................................................................................. 14
POINTS OF IMPROVEMENT ..................................................................................................................... 15
MERCHANT MONITORING AND REVIEW ...................................................................................................... 16
IMPLEMENTATION OF MERCHANT MONITORING.................................................................................. 18
POINTS OF IMPROVEMENT ..................................................................................................................... 18
SIZING THE MARKET OPPORTUNITY ............................................................................................................. 20
CONCLUSION ................................................................................................................................................ 22
RELATED AITE GROUP RESEARCH ................................................................................................................. 23
ABOUT AITE GROUP...................................................................................................................................... 24
AUTHOR INFORMATION ......................................................................................................................... 24
CONTACT ................................................................................................................................................. 24

LIST OF FIGURES
FIGURE 1: GROWTH OF E-COMMERCE AND CNP FRAUD IN THE UNITED STATES ......................................... 6
FIGURE 2: MARGIN EROSION IN U.S. ACQUIRING .......................................................................................... 7
FIGURE 3: ONBOARDING AND UNDERWRITING PROCESS ........................................................................... 12
FIGURE 4: MERCHANT MONITORING AND REVIEW PROCESS ...................................................................... 16
FIGURE 5: ADDRESSABLE MARKET FOR MERCHANT ONBOARDING ............................................................ 20
FIGURE 6: ADDRESSABLE MARKET FOR MERCHANT MONITORING AND FRAUD PREVENTION ................... 21

LIST OF TABLES
TABLE A: MARKET TRENDS IMPACTING ONLINE MERCHANT ACQUIRING RISK MANAGEMENT ................... 5
TABLE B: ONBOARDING AND UNDERWRITING PROCESS ............................................................................. 12
TABLE C: MERCHANT MONITORING PROCESS ............................................................................................. 17

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