Global QSR Approves More Mobile Transactions with Incognia

The restaurant industry is under unprecedented pressure due to the pandemic, but mobile order-ahead has been an encouraging bright spot. However, wherever there are digital payments, there will also be a fraud. Mobile orders to Quick Service Restaurants (QSRs) provide the perfect conditions for card testing. 

Incognia was approached by a global QSR that was challenged to reduce chargebacks while not blocking mobile, buy online, or pick up in-store (BOPIS) orders.

The high volumes of low ticket mobile transactions processed every day by QSRs, enable fraudsters to verify whether a card is still active without sounding the merchant’s alarm bells or tipping off the card owner. These fraudulent transactions leave QSRs with high volumes of chargebacks and associated fees imposed by card processors. 

In an effort to stop this practice, many QSRs rely on existing fraud detection solutions. Unfortunately, basic fraud rules don’t cut it. Transaction data alone isn’t enough to distinguish between legitimate purchases and fraud. Solutions like Address Verification Services (AVS), enable merchants to authenticate the ownership of the credit card used in card-not-present transactions by matching the billing address to the address on file with the card issuer. Unfortunately, in most cases, the fraudsters have enough information to bypass this basic checkpoint. In fact, rather than solve the problem, approaches like this tend to transform a fraud problem into an acceptance problem that can significantly impact top-line growth. 

Changes in shopping behaviors brought about by the pandemic have added further complexity.

Mobile order-ahead, including services like buy online and pick up in-store (BOPIS) and curbside pickup, are introducing new challenges to transaction verification.

With card-not-present fraud more sophisticated than ever, and the speed with which these orders need to be fulfilled, there is very little time to conduct manual reviews, leaving a lot of room for fraud. 

Incognia was approached by a global QSR that was challenged to reduce chargebacks while not blocking mobile BOPIS orders. To cut down on chargebacks, the company implemented its payment processor’s fraud prevention solution. It worked to reduce chargebacks but the solution was blocking 54% of all mobile BOPIS orders, severely impacting the business. 

Incognia’s fraud detection solution based on location behavioral biometrics enabled the QSR to add an enhanced risk-based decision layer of device and location intelligence to their transaction verification process reducing reliance on the transaction information and AVS checks,

Incognia enabled the QSR to reduce friction for good customers resulting in a 70% increase in transaction approvals. In addition, Incognia enabled the QSR to more effectively identify accounts with inconsistent device and location behavior resulting in a 30% reduction in fraudulent transactions.

To read more about this QSR’s results, download the full case study here.