In a significant shift in the payment processing landscape, Stripe has reported a remarkable 40% increase in non-card payment volume over the past year. This surge not only reflects changing consumer preferences but also introduces a variety of implications for how businesses manage transactions, particularly in the realm of fraud prevention.

Traditionally, card payments have been the primary method for online transactions; however, the rise of non-card payment methods, such as Automated Clearing House (ACH) transfers and Single Euro Payments Area (SEPA) payments, offers both opportunities and challenges. Notably, while many non-card payment methods exhibit lower fraud rates when compared to traditional card transactions, they also bring about new fraud risks that need to be carefully managed. One of the key challenges is the longer settlement period associated with bank debits, which can take up to four days to clear. This extended timeline means that businesses face the risk of failed bank payments and the potential for lost revenue, especially if they deliver goods and services before the transactions are finalized.

In response to these evolving challenges, Stripe is enhancing its Radar fraud protection suite to encompass ACH and SEPA payments. Leveraging the same artificial intelligence (AI) architecture that powers Radar for card transactions, the company has developed new AI models specifically designed to screen and block risky ACH and SEPA transactions effectively. This proactive approach allows businesses to confidently adopt the payment methods that their customers increasingly prefer, secure in the knowledge that robust fraud protection tools are in place, tailored to the unique fraud profiles associated with these payment methods. Companies such as Xero, Jobber, and FreshBooks are already reaping the benefits of these new Radar models, witnessing an average reduction of 42% in SEPA fraud and a 20% reduction in ACH fraud.

Stripe's innovative approach to addressing fraud in bank debit transactions is particularly noteworthy. Due to the lengthy settlement period, immediate payment confirmation signalsoften used for predicting card fraudare not available. To combat this, Stripe has engineered hundreds of new features that account for the asynchronous nature of ACH and SEPA transactions. For instance, the company now considers factors such as the average order value, which typically tends to be higher for direct debit transactions compared to card transactions, and a financial institutions historical success and failure rates in processing payments. This wealth of information enhances the predictive capabilities of their models, enabling them to identify and automatically block transactions that are likely to fail.

Furthermore, with the introduction of Radar for Fraud Teams, businesses will have the ability to customize their fraud protection rules based on payment method types, utilizing new attributes fine-tuned to ACH and SEPA payments. For example, users can establish rules to block bank account routing numbers that have previously been linked to fraudulent activities. This level of customization extends to the default block and allow lists, providing businesses with the flexibility to tailor their risk thresholds according to the specific types of payments they process.

All existing Radar users will automatically benefit from these enhancements to ACH and SEPA fraud protection, with no additional effort required on their part. Moreover, the seamless integration of Radar with other Stripe products, such as Checkout and Connect, ensures that businesses receive comprehensive fraud protection across all payment platforms and configurations.

Looking ahead, Stripe is committed to maintaining its innovative edge by expanding Radar's support for emerging payment methods that exhibit high fraud rates. The company is actively encouraging customers to provide feedback on which payment methods they would like to see supported in the future.

For businesses eager to bolster their defenses against fraud, learning more about Radar and its capabilities is a crucial step towards safeguarding their operations. With the evolving landscape of payment preferences, staying informed and prepared is essential for navigating this complex environment.