Online Risk and Compliance Day Session One Recap: Modern Merchant and Submerchant Underwriting Best Practices

LegitScript branded graphic for blog post about Online Risk and Compliance Day.

Earlier this month, LegitScript, Marketplace Risk, and the Merchant Risk Council hosted Online Risk and Compliance Day, an industry-wide day of education and networking for professionals working in merchant risk & compliance and in trust & safety. This is a recap of Session One, which included Menda Sims, a Payments Executive; Deana Rich, co-CEO of Infinicept; Eric Woods, VP of Loss Prevention at Elavon; and Lance Rich, Sr. Director, Underwriting and Partner Due Diligence at Payrix.

Attracting new merchants is a delicate balance between due diligence and providing a seamless customer experience. Payment service providers are encouraged to create a faster and more frictionless environment while bad actors use increasingly sophisticated tools.

Here are the key takeaways from our discussion surrounding modern merchant and sub merchant underwriting best practices.

Protect Your Business Ahead of Time With These Key Takeaways

Menda Sims: “Underwriting is not in conflict with sales and revenue growth. There is a way to align and work together. It's important that you do this in order for your company to succeed.”

Lance Rich: “Be connected and aware of the trends that are out there as an organization to try to be a step ahead of what's happening in the industry. If it's happening over at ‘ABC,’ it's coming our way.”

Eric Woods: “Our world is understated, it’s dynamic, and [it] changes constantly. Leverage the experience of your peers. Leverage the experience of your staff. And then take the time to learn from mistakes or issues and build from that.”

How To Feed into Your Ecosystem With a Partner That Accommodates Your Risk Appetite

Who you enter into a partnership with is as critical as the technology you use. Panelists talked about the two most important elements to successfully mitigating risk.

Technology: Technology is fundamental to mitigating risk. Bad actors are cultivating their technology and your job is to lessen the damage to your ecosystem. One important resource, according to Sims, is good data analysis.

“So data mining, data scientists are in place to [provide] feedback into your ecosystem, into your fraud engine, so that it's getting smarter.” Sims said. “I think that's where underwriting of the future continues to evolve. It’s looking at the technology that you have in your ecosystem not just as the acquirer or the processor, but also as a payment facilitator. I think there is a unified responsibility of all to ensure that collectively there is a partnership to reduce any kind of risk.”

Partnerships: Who you enter into partnership with is as critical as the technology you use, according to panelists. A partner must be competent, reliable, and in tune with your goals.

“You need to find a company that meets and agrees with your risk appetite,” Woods said, “and helps you use their expertise to mine out those bad actors.”

On the Same Note About Partnerships — “Educate, Educate, Educate”

According to panelists, the best solution to mitigating third-party agent risk is cultivating a culture of continuous learning and education. It’s important to understand how these third parties conduct their business. Ensure you have the technology in place to mitigate risk, educate your customer, and give them a valuable experience.

“We talked a lot about our partners, and in many cases, these partners may not have this experience that we expect on the risk side and underwriting side. In many cases, they are relying on us to educate them on best practices and things that we need to do. So that is key,” Lance Rich said. “Eric mentioned, ‘Learn, learn, learn, educate, educate, educate’.”

Help Us Help You

For more than a decade LegitScript has partnered with payment service providers to help them mitigate risk and more confidently grow their portfolios. If you have questions about how we can help you reach your business goals and remove cybercriminals from your ecosystem, contact us. We look forward to helping you.