When it comes to fraud, today's perpetrators are sophisticated innovators who are constantly looking for new ways to earn a payday.
Luciana's Kiva loan helped her buy colorful thread to grow her textile business. Photo courtesy of Kiva.
Worst of all, fraudsters don't discriminate — consumers, retailers, and even nonprofits are all habitual victims of fraudulent activity. However, PayPal's Fraud Protection Advanced (FPA) is helping to dramatically reduce risk by using artificial intelligence and data from both merchant and consumer accounts to predict whether a transaction is fraught with risk.
Kiva, an international non-profit that utilizes crowdfunding to source microloans for entrepreneurs in significantly under-resourced communities, was one of the first to test out the FPA solution. Today, they say it's a tool they heavily and readily depend on and credit it for saving them hours a day in tedious work.
"Before integrating with FPA, we were using tools that weren't optimized for the size of our team. There was an opportunity to reduce the number of hours spent reviewing transactions," said Kate Irick, a senior manager on Kiva's Customer Success team. She said, at one point, the team was reviewing a high number of transactions a month for suspected fraud. "That's what we were hoping FPA would solve when we moved over, and it has certainly done that."
Founded in 2005, Kiva provides helpful resources to people of many different backgrounds to support them in their entrepreneurship goals or achieve a personal milestone. The entrepreneurs they help are involved in all industries, including agriculture, arts, education, health, and more. Other loans are given to people who need money for personal use, such as looking for materials to rebuild their homes or food for their livestock.
Kate said that, on a weekly basis, since Kiva switched to PayPal's fraud solution, the number of transactions her team has had to review has decreased tenfold.
"There has been a very significant reduction in false positives and that value has just increased over time, thanks to the expertise of the FPA team. They have been highly proactive and responsive to our needs as a merchant," she added.
Kate said that in the last 12 months, Kiva has experienced very low chargebacks, far below its target. Chargebacks are when merchants have to pay credit card companies or banks back for fraudulent or disputed charges.
Relying on experts for fraud detection and prevention
Laura and her husband borrowed through a Kiva lending partner
for their business selling typical Colombian food. Photo courtesy of Kiva.
The company has distributed about $2 billion in loans to 5 million business owners worldwide, and more than 96% of those have been paid back to the lender. Kiva has been a long-time user of Braintree, PayPal's payment processing solution, which allows the non-profit to easily accept and disburse loans in different currencies around the world.
Hand-in-hand with FPA, the team at Kiva now has a comprehensive understanding of their transactions. Kate credited PayPal with simplifying their ability to analyze transactional data, with FPA providing useful and reliable reports to further insight and allowing analysts to hone in on the details.
"It makes sense because PayPal has deep expertise in this area, which adds so much value," she said.
"FPA has been, without a doubt, an effective tool for managing payment fraud," she added. "This technology enables a more efficient and accurate analysis, ultimately enhancing our decision-making process. We know that the job of detecting and declining transactions is in highly capable hands because the people behind this tool put so much time and energy into building a solution that was going to be effective."
For more on how PayPal can help your business succeed, please visit paypal.com/enterprise.
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