This ongoing dichotomy forces payment ecosystems to adopt more adaptive and resilient fraud prevention measures.
Marcos Gelfi, vice president - global head of commercial fraud/dispute products and cardholder solutions at Discover® Global Network, Jeff Hallenbeck, head of payments at Forter, and Freyja McKenna, head of fraud and risk, EMEA at Adyen, told PYMNTS in an interview how data-driven decisioning is emerging as a fundamental force in fraud prevention.
"By capturing enhanced data during checkout and sharing it in real time, we empower issuers to make accurate decisions that protect both merchants and customers from unnecessary declines," Gelfi said.
This data-sharing approach improves fraud detection and allows Discover Global Network to enhance security and the customer experience, he said.
Working alongside partners Adyen and Forter, Discover Global Network aggregates data across merchants and issuers to identify trends and set industry benchmarks. Real-time alerts and transactional monitoring allow for rapid response and pre-authorization adjustments, helping to reduce false positives and prevent fraud before it impacts the consumer, Gelfi said.
"Data and risk decisioning play a huge role in this," McKenna added. "We try to use data in a holistic approach. Machine learning models are continuously trained on both historical and real-time data, allowing us to distinguish between typical and unusual behaviors."
"This adaptive and data-informed approach ensures that [the network can] stay ahead of evolving fraud tactics and without adding that friction for genuine customers," she said.
Integrating machine learning, industry collaboration and proactive fraud detection are emerging as essential elements of modern fraud management. One of the most pressing questions for payment providers is how to assess the impact of fraud prevention on customer lifetime value.
"The aim is to keep fraud at bay without penalizing legitimate customers," McKenna said.
Today's models go beyond hard data, using "soft linking" signals, such as user behaviors, to maintain a streamlined checkout experience without compromising security, Hallenbeck said. On the one hand, blocking fraud is easy if you don't do transactions. The flip side is opening up to risk if everything gets approved. The balance in building risk models has now become finding the sweet spot, understanding what the business has, what type of customer experience they want to deliver, and what profit efficiency metrics they want to drive toward.
McKenna said one goal is to reduce friction for legitimate customers by deploying dynamic 3D Secure and other verification methods only when the fraud risk is high, aligning with merchant-specific risk profiles.
Tokenization -- replacing sensitive payment information with a unique identifier -- has become a cornerstone in payment security. Both McKenna and Hallenbeck described it as table stakes, with each highlighting their own firms' unique approaches. McKenna shared that Adyen's practices include one-time cryptograms and secure token vault management, which are regularly audited to maintain compliance.
While Forter also regards tokenization as foundational, Hallenbeck pointed out an evolving business need.
"How do I provide business flexibility to interact with partners while ensuring data security?" he said.
The future of tokenization must balance rigorous security with operational agility to avoid hampering business growth.
Understanding customer identity across devices and digital personas can unlock deeper insights into lifetime value, he said. With the right identity intelligence, businesses can identify trusted customers more effectively, which can have long-term benefits for customer loyalty and profitability.
The panel agreed on one central theme: A one-size-fits-all approach to fraud prevention is ineffective in today's payment landscape. Whether it is data-sharing initiatives from Discover Global Network, Adyen's hybrid machine learning-human fraud detection model or Forter's identity intelligence, the key to successful fraud prevention lies in tailored, data-driven solutions.
As fraud techniques grow in sophistication, it's clear that balancing security with customer experience will be a top priority in the payments industry.