Payment Card Fraud Detection via Delivery Data Analysis
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Solution Overview
Problem
Conventional electronic payment systems face challenges in efficiently and accurately detecting friendly fraud and actual fraud in card-not-present transactions, leading to substantial financial losses and inefficiencies in chargeback processing.
Innovation Solution
An electronic payment card processing system that retrieves and analyzes delivery data for disputed charges to determine whether they are friendly fraud, using a host computing device configured to link delivery data with transaction data and generate recommendations for chargeback disputes, thereby reducing fraudulent losses and improving dispute resolution efficiency.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If conventional chargeback processing is used without delivery data analysis, then processing speed is maintained, but fraud detection accuracy deteriorates leading to substantial financial losses
Solution Approach 1:
The system performs preliminary actions by retrieving and storing delivery data before chargeback disputes occur. Delivery confirmation data is obtained from carriers and stored in association with transaction data, so that when a chargeback is initiated, the evidence is already available for immediate analysis, eliminating the need for complex real-time investigations
Solution Approach 2:
The host computing device acts as an intermediary between the payment processing system and delivery carriers. It retrieves delivery data from carriers, stores it centrally, and makes it available for chargeback analysis, simplifying the interface between multiple parties and reducing overall system complexity
2Measurement precision
If delivery data is retrieved and analyzed for every disputed charge, then fraud detection accuracy improves, but processing time increases
Solution Approach 1:
Delivery data is retrieved and stored in advance before disputes occur. The host computing device obtains delivery confirmation from carriers and stores it in association with transaction data proactively, so that when a chargeback is initiated, the analysis can be performed quickly using pre-retrieved evidence rather than initiating new investigations
Solution Approach 2:
The system automatically retrieves, stores, and analyzes delivery data without requiring manual intervention. The host computing device self-services the chargeback analysis process by automatically obtaining delivery data from carriers and generating fraud detection results, eliminating time-consuming manual review processes
3Productivity
If manual chargeback dispute processing is used, then system complexity is reduced, but productivity and resolution efficiency deteriorate
Solution Approach 1:
The host computing device automatically performs chargeback analysis by retrieving delivery data, comparing it with transaction data, and generating fraud detection results without manual intervention. The system self-services the entire analysis process, from data retrieval to recommendation generation, significantly improving processing efficiency
Solution Approach 2:
The system implements feedback loops where delivery data is continuously retrieved, analyzed against transaction data, and used to generate recommendations that are fed back into the chargeback decision process. This automated feedback mechanism enables high-speed processing while maintaining sophisticated analysis capabilities
4Loss of information
If delivery data is stored and linked with transaction data, then evidence availability improves, but information storage requirements increase
Solution Approach 1:
The system extracts only the essential delivery data elements needed for chargeback analysis, such as delivery confirmation status, delivery date, and carrier information. By extracting only the relevant evidence portions rather than storing complete delivery records, the system maintains evidence availability while minimizing storage requirements
Solution Approach 2:
The host computing device creates and stores electronic copies of delivery data in a centralized repository. These digital copies serve as evidence without requiring physical document storage, enabling efficient retrieval and analysis while maintaining compact storage formats
Data Source
AI summary
An electronic payment card processing system and method includes at least one host computing device having at least one processor in communication with a memory device and a multi-party payment processing system and network for processing payment card transactions. The at least one host computing device retrieves delivery data for a purchased item associated with at least one disputed charge by a cardholder of a payment card transaction that was previously approved through the multi-party payment processing system, and analyzes the retrieved delivery data to determine a basis for the at least one disputed charge including whether the at least one disputed charge is friendly fraud.