How Square manages fraud
I came across this video tonight and thought it was a good example of how companies are beginning to harness the power of this sea of information we're swimming in to handle complex, real-time decisioning. In this case, Jack Dorsey describes the types of information they use to manage fraud risk at Square
Frommer: "One of the most interesting things for me is fraud. How do you do fraud in a different or smarter or in a 2.0 kind of way"
Dorsey: "We have strong identity on both sides [of the transaction]. Our users are putting up their Twitter accounts, their Yelp accounts, they put in an address which is on the map, so we can use this information to understand who they are and what they are trying to do so we can minimize a lot of that fraud and a lot of that risk because we have a greater understanding of their reputation in the ecosystem and in the world.
Frommer: So whereas my credit card company may be looking at my purchase history, you may be looking at my social media history to see if I'm a real person.
Dorsey: Exactly. There's so much information out there that we can use to establish reputation and people are putting this information out willingly. You're saying, I am at this location, I'm buying a cappuccino now, or I think this about this news article, or I'm a business and I have a Yelp account with five stars. So there's a lot of information we can use in a very, very comfortable way to understand who a person is and verify their identity.
Frommer: And you can archive that in real time as transactions are occurring, your system can do that. And you're doing that now?
Dorsey: We're doing it.
Interesting fact that may only interest me
One other point to note. Jack mentions that only 6% of transactions have moved online. The other 94% are still happening in the "real" world. While I can't fact-check that statement, I'm sure Jack did.
One other point to note. Jack mentions that only 6% of transactions have moved online. The other 94% are still happening in the "real" world. While I can't fact-check that statement, I'm sure Jack did.
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