New solution protects open banking against fraud
Open banking, connecting banks, third parties and service providers, allowing them to exchange information quickly and securely, has been rolling out since 2018 and delivers a great deal of convenience for consumers.
However, while it doesn't introduce new fraud risks in itself, open banking does create opportunities for fraudsters to attempt account takeovers, for example, or to target banks' own PSD2 (Payment Services Directive 2) implementations for Payment Initiation Service Providers (PISP).
In order to prevent such attacks Volt is introducing Circuit Breaker. This uses a flexible rule system, which applies a score to each payment received. This score is based on rules like volume of transactions, number of initiated transactions, and transaction amount. If the score triggered by these rules equals 100 or higher, the transaction is blocked and the fraud attack prevented. The rules can be amended by merchants according to their changing needs -- for example, during a period of growth.
Secondly Circuit Breaker enables merchants to create blocklists of confirmed fraudsters based on criteria such as the bank they're paying from, their device fingerprint, and their email address. To build them, merchants simply choose their preferred criteria, set a value against them, and select 'block'.
Steffen Vollert, Volt's chief technology officer, says:
Circuit Breaker is designed like a surgical tool -- to specifically address issues with specific banks or clearing mechanisms, and to overcome the operational inhomogeneity of the European banking landscape. One big problem is that banks apply their fraud prevention systems -- designed for a cards world -- to open banking. This can result in merchants being blocked, often without explanation, in the event of a fraud attack.
Circuit Breaker overcomes this by 'filtering at the gate' before sending transactions to the bank. Circuit Breaker is especially effective when used in combination with Volt Connect because, together, they offer merchants full-payment-cycle insight. This is a first for open banking.
You can find out more on the Volt site.
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