Stripe’s new Radar fraud detection tool

stripeOnline payments provider Stripe has introduced a new suite of modern tools called Stripe Radar, to prevent fraud, fully integrated with their payments flow.

The thinking behind Stripe is that too often retailers turn down business with blanket bans to protect against fraud. For instance you might decide to block all credit cards from Nigeria on the basis that the country has previously had a terrible reputation for fraud. Today however there are plenty of well off honest Nigerians who may wish to purchase from you. Likewise a blanket ban on pre-paid credit cards may lose you plenty of legitimate business.

Stripe reckon that almost half of all US consumers have made a purchase with their card through the Stripe network. They can leverage their data of purchase patterns, IP addresses and other signals to determine the risk of any particular transaction. False positives, events when a card is declined for the wrong reason, are missed sales for retailer and Stripe Radar aims to return the decision making power to the retailer.

With Stripe Radar you could for example choose to block the most risky transactions, but choose to allow borderline transactions to proceed. Of course this will vary by business model, but someone selling greetings cards is probably a lower risk for fraud than someone selling the latest iPhone and the acceptable risk profile will be different.

Stripe Radar is intended to allow retailers to stop imposing blanket bans, for instance there’s no need to block all international transactions which can seriously inhibit business growth, Stripe Radar can allow the majority of safe international transactions to proceed whilst flagging the most risky transactions for review.