We see three types of fraud detection systems: those that a business can develop in-house, those from legacy payment tech vendors, and those provided by dedicated vendors.
|In-house systems||These systems are useful when businesses need to get started and react quickly. They just need to know how to program the payment flow.
However, programming the fraud prevention rules in-house does not scale. Expertise will be a limiting factor down the road. Managing rules may become a pain, especially if the per- son who creates the rules leaves the company.
|Legacy systems||These systems come from commercial banks and payment service providers. If the e-commerce service’s needs are limited, these systems are conceptually simple and good to start with.
This may be the case if the merchant operates in its country of origin and accepts only domestic cards. However, some payment service providers have customizable fraud detection systems whose performance approaches the one of dedicated systems.
|Dedicated systems||Dedicated fraud detection systems exist for large retailers who need the safety conferred by large service providers.
There are also a range of start-ups. These are the best choice when innovation, domain-specific expertise, automation, and price competitiveness are necessary.