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How One PSP Reduced Unauthorized Merchant Aggregation By 97%

Post Categories: Blog

– September 30, 2013 –

The following case study demonstrates how G2 Web Services, a leading payment risk management company, helped a U.S. payment service provider to identify unauthorized aggregation within its merchant portfolio, ultimately reducing its risk and creating new merchant opportunities.

Merchant Aggregation: Understanding the Problem

This particular payment service providers’ portfolio had 2,168 known merchant websites that contained higher risk online adult merchandise. The payment service provider (PSP) was enrolled in G2 Persistent Merchant Monitoring to carefully monitor its merchants for website content compliance. However, the PSP was not monitoring for aggregation, which left it vulnerable to potential violations and financial loss.

Aggregation can easily go unnoticed, as it involves an unknown merchant using a legitimate merchant account to process transactions. Without being aware of these aggregating sites, the PSP was facilitating the transactions of potentially illegal and/or brand damaging goods and services, and opening it up to aggregation assessments from the card networks. Upon learning more about aggregation risk potential and its rise in the industry, they sought help from G2 Web Services to determine the full scope of their merchant aggregation risk.

G2 Deployed Aggregation Detection Technology to PSP’s System

G2 Web Services deployed its Aggregation Detection technology to the PSP’s system. Over a period of 8 weeks, Aggregation Detection continuously identified all websites routing transactions through the PSP’s merchant accounts, determined the number of aggregating merchants, and analyzed them for website content violations.

Reduced Unauthorized Merchant Aggregation by 97%

After 8 weeks, Aggregation Detection had uncovered that 7% of visits to the PSP payment page were from aggregating sites. After identifying these sites, G2 Web Services analyzed each website to determine their compliance and found 9 violations and 88 potential violations, which presented significant risk to the PSP and its acquirer. This case study revealed that with the use of Aggregation Detection, the average percentage of aggregating sites dropped to 0.2%. This equated to a 97% reduction in aggregation with weekly processing and over $1.8 million mitigated in potential assessment penalties that could have resulted from these otherwise hidden content violations.

Decreased Aggregation While Gaining New Business Opportunities

By deploying Aggregation Detection, the PSP gained the transparency to identify aggregating websites, giving them the ability to reach out to those websites, check for compliance and potentially open the door for new business opportunities. Not only did they limit their future risk, but they also grew their portfolio.

 

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