AHMED GHARIB: Welcome, everyone. Welcome to our breakout session on the payments experience. My name’s Ahmed, and I’m a product lead on our checkout experience team.

MARCIA JUNG: Hi, everyone. Excited to be here. I’m Marcia, and I’m lead product for auth performance.

AHMED GHARIB: Auth performance? Marcia, this talks about the customer experience. Are you sure this is the right session?

MARCIA JUNG: Yes. Authorization has a bigger impact on the customer experience than you might think.

AHMED GHARIB: Really?

MARCIA JUNG: Yes, really. Oftentimes, when businesses think about payments, they’re really only thinking about what’s on their checkout pages. So, I’ll be sharing more about what happens behind the scenes, post-checkout, and how it impacts the customer experience.

And then I’ll dive deeper on updates to our payment optimizations for all the payment nerds and enterprise leaders out there. And finally, I’ll be joined by two of our partners from American Express and Capital One. What about you, Ahmed?

AHMED GHARIB: So, I’ll be talking about the checkout experience and some of the consumer ships we’re seeing online, offline, and around the globe, and what payment leaders should be doing about it. We’ll also have Peter from Thinkific, a Stripe user, and a head of commerce to tell us more. Many of you -

MARCIA JUNG: Actually, I just got a text that there’s still Warriors tickets for tomorrow night, so I’ll be back in a bit.

AHMED GHARIB: Oh, all right. Good luck, Marcia. All right. Let’s dive back in. Many of you have told us you want to hear more on navigating the current global economy. So, let’s start there.

We’re entering a new era. After a massive leap in growth from the pandemic, ecommerce growth is no longer moving at a breakneck pace. It’s gone from almost 30% year over year to less than 10% today. Slower growth is the new normal, which is why you need to make every customer count.

But all too often, businesses are seeing customers make it to the finish line of a purchase but not across it. Why? It’s because many businesses still don’t view payments as a key part of their customer journey. But in many ways, payments are the most important part.

You’ve already spent so much time and money to get your customer to the purchase stage, only to lose them. And if you lose them once, you might lose them forever. And that’s why payments aren’t just a transactional utility. There’s a person behind every payment.

I wanted to learn more, so I went right to the source. Let’s see what they have to say.

[Video playing.]

MADDY GAIMAN: Hi.

KYLE STEVENS: How you guys doing?

BRITTANE ROWE: I’m 34 years old, and I’m a business owner.

ALLEN ENLOW: I’m 61 years old.

HIPPOLYTE PETIT: I’m 27 years old.

ROSENA NELSON: I design women’s lingerie.

ALLEN ENLOW: I’m an actor and a standup comic.

NYMME: We’re from Sweden.

LINNEA: We’re from Sweden.

JALL COWASJI: Mumbai.

WEI XIN: Singapore.

ALLEN ENLOW: I just bought something online yesterday. I buy things online all the time. Why? Because I’m lazy, and everyone’s lazy now.

HIPPOLYTE PETIT: I think when there are just too many steps—

WEI XIN: When I’m having to go through the whole process of signing up for an account—

It turns into, like, a 10-minute ordeal just to check out.

HIPPOLYTE PETIT: That often can just turn me off and have me leave the whole checkout experience.

ROSENA NELSON: If I have to go in my bag or go look for my wallet, it’s too much.

NYMME: It’s like you’re laying in bed, and then your card is, like, in your bag in the hallway. It’s like, ugh!

ROSENA NELSON: By that time, I’m already deciding, “Do I even want this anymore? Have I changed my mind now?”

HIPPOLYTE PETIT: When it doesn’t feel like a checkout experience. When you get out of your Uber or Lyft and you don’t even feel like you’re paying.

NYMME: When you can basically, like, Apple Pay yourself out.

ROSENA NELSON: You can prefill your information and it saves it for you.

MADDY GAIMAN: If something is, like, a one-click –

BRITTANE ROWE: One-click –

WEI XIN: One-click buy.

MADDY GAIMAN: That kind of thing makes shopping online a pleasure.

BRITTANE ROWE: Boom, you—you made the sale. I’m a repeat customer.

LINNEA: It needs to be fast. Otherwise, I’m just like, “No, I’m not going to buy this.”

ROSENA NELSON: A seamless checkout will usually take literally less than 30 seconds to pay.

BRITTANE ROWE: Less than 30 seconds.

MADDY GAIMAN: 10 seconds.

NYMME: 10 seconds.

HIPPOLYTE PETIT: Two seconds. Maybe I’m too ambitious.

AHMED GHARIB: So, yeah. So, what did we learn? Well, we heard that checkout should be seamless. It should be one-click. It should feel like you’re getting out of an Uber. And that’s because consumer expectations are constantly growing. And the payments experience is no longer a nice-to-have. It’s a necessity.

In short, your payments experience is your customer experience. But every extra click or millisecond is dropping your conversion and costing your business. We heard that people expect checkout to take no more than 30 seconds, 10 seconds, even two seconds. But in reality, the typical online checkout takes more than three minutes. That is a really, really long time.

Why is that happening? It’s because 95% of ecommerce sites still contain five or more basic errors. These are really simple errors like lacking native autofill support, not properly supporting all mobile devices, not supporting different localization. And while each of these issues feel small, they really add up. And these paper cuts cost your—these paper cuts cause your customers to turn.

And not only that, but we all have different ways to pay. So, let’s head back to Washington Square Park to see how—what they had to say about that.

[Video playing.]

LINNEA: I use Apple Pay.

ROSENA NELSON: I use PayPal, I use Klarna, I use Afterpay, Affirm.

MADDY GAIMAN: Klarna and Afterpay.

ALLEN ENLOW: I usually use PayPal when it’s set up automatically.

NYMME: Wish is a payment type. It’s connected to your phone number directed to your bank account.

BRITTANE ROWE: My credit card. It’s super simple for, like, racking up those points.

ALLEN ENLOW: Credit cards.

Do people in Sweden typically use credit cards?

NYMME: No.

LINNEA: No.

JALL COWASJI: I just think the concept of a credit card isn’t one that is promoted in India as much. There’s something called Paytm, and we’ll pay the primary dominating apps to pay right now.

WEI XIN: I, like, use this app called Shopee. It also allows you to pay using this thing called Shopee Pay, which is their own mobile wallet.

HIPPOLYTE PETIT: I usually try to use whatever is the fastest way to pay and get on with my life.

AHMED GHARIB: So, it’s clear that payments are local. Payments are personal. Britt loves her credit card points, but Nymme doesn’t even own one. Meanwhile, Maddy uses Afterpay. And Hippo—well, Hippo will just use whatever is fastest.

These personal preferences have resulted in an absolute explosion of payment methods. Everything from wallets to buy now, pay laters to dozens of local payment methods. And not supporting the payment methods your customers prefer comes at a cost.

Our data shows that 85% of consumers will abandon their purchase if their preferred payment method isn’t offered. This is especially important as businesses are seeking growth in new markets.

And so, if you don’t accept the payment thirds that your customer wants, you’ll leave many of them behind, and money on the table. At Stripe, we obsess over making your payments experience a great customer experience. And that’s why we built our optimized checkout suite.

The optimized checkout suite brings together all the tools businesses need to deliver a great payments experience. It all starts with Stripe’s optimized UIs. The Payment Element and Checkout. We built these UIs to remove the friction from your checkout experience with mobile-friendly navigation, autofill, error messages, and over 100 other micro-optimizations. All with a single integration.

Great. So, now you have a pretty slick payment form. It’s feeling good for your customers. But which payment methods do you offer? This is where automatic payment methods comes in. Stripe handles all the payment method complexity. So, with no code changes at all, your checkout can support Google Pay for Jall, Afterpay for Maddie, or more than 40 other payment methods, all with the flip of a switch from the Dashboard.

And whether your customers are in the US, the UK, Brazil, Japan, wherever, Stripe dynamically surfaces the top two or three most relevant payment methods for each customer based on several factors, including location, device, and transaction amount.

And like we heard earlier, customers want to check out fast. Like, really fast. And that’s why we built Link, Stripe’s one-click checkout experience that can be natively embedded right into your checkout. When OpenAI activated Link, they saw customers with a Link account check out 40% faster and with double the conversion rate.

With Link, you’ll tap into a global network that’s adding millions and millions of new accounts every month. And as you heard in the keynote, when you bring all these products together, they lead to a 10.5% uplift in revenue. And the best part? You can do all of this in as little as an afternoon.

Great. So, we’ve talked a lot about online checkout. But what do people expect when they pay in person? Let’s head back to Washington Square Park.

[Video playing.]

HIPPOLYTE PETIT: I don’t have a wallet.

Do you have a wallet?

BRITTANE ROWE: I do. I have Apple Wallet. You mean like crypto? Oh, a physical wallet?

Yeah.

MADDY GAIMAN: I literally don’t carry my wallet around anymore.

ROSENA NELSON: The only reason why I had a wallet is because Kate Spade had this great sale. But I don’t really use it anymore.

NYMME: I do carry a wallet, but I usually have my phone in my hand. So then, it’s easier to just click it and leave.

90% of the time.

LINNEA: Yeah, 90%.

MADDY GAIMAN: If I’m shopping in-person, I use Apple Pay.

WEI XIN: Everything’s in my phone, so I can just tap.

JALL COWASJI: Every vendor has this QR code thing, so it’s just the easiest thing to scan it on your phone and—and pay them through Google Pay.

BRITTANE ROWE: It’s usually, like, quicker and more accessible to have my phone.

ROSENA NELSON: As long as I have a full battery, just charge it and click it, and it’s done.

AHMED GHARIB: So, funny story about this video. We originally had planned to ask everyone to show us what was in their wallet. We thought they’d show us, like, their credit cards, licenses, and stuff. And then, halfway through, we realized no one had one. So, that was a fun experience.

I think it’s fair to say that the days of swipe and chip are becoming a thing of the past and contactless payments are here to stay. The demand for frictionless online and offline experiences is rapidly growing. Features like buy online, pick up in-store, curbside checkout, contactless payments are just becoming expectations across the world.

In fact, Gartner predicts that within the next two years, organizations that offer unified commerce will see a 20% uplift in total revenue. And that’s why we built Stripe Terminal. Terminal can be used in-person, on countertops, or curbside. And with Tap to Pay, you have even more flexibility for in-store queues, popup shops, and events. So, customers like Rosena can just keep that Kate Spade wallet at home.

All of this works seamlessly with your Stripe integration, the same exact integration that you’re using to power your online store. And to top it all off, we’ve seen that businesses that use Terminal can have higher retention rates. For example, Housecall Pro was able to increase their customer lifetime value by 40% through Stripe Terminal.

Great. So, we’ve heard a lot from our customers. Now, let’s hear from one of our users, and how they’re navigating the current landscape. Please welcome Peter Fitzpatrick, VP and head of commerce at Thinkific.

Hey, Peter. Thanks for joining us.

PETER FITZPATRICK: Thank you for having me.

AHMED GHARIB: All right. Maybe to kick things off, Peter, could you walk us through what Thinkific does and what your role as VP and head of commerce entails?

PETER FITZPATRICK: Yeah, for sure. So, Thinkific is a platform that people or creators use to create and sell online education. Over 50,000 creators use Thinkific to sell online courses, access to communities.

And my role as head of commerce is to build tools and – and programs that help them sell more, and automate the administration that’s required of actually creating the business that powers their education.

AHMED GHARIB: So, we’ve spent quite a bit of time talking about the big shifts we’re seeing both in consumer behavior and with the overall market. Could you walk us through what Thinkific is seeing and what you’re doing about it?

PETER FITZPATRICK: Yeah. So, thinking about—like, the—the—neither of these are brand new trends, but they’re sort of long-term trends that we think are getting increasingly acute.

So, the first one that we’re focused on is reducing the amount of time or effort required to check out. We see, over and over again, that when we make that simpler and faster, students buy more. Like, if I could have a perfect world, there would be no checkout. So, I see an opportunity to make it easier, like Uber and Lyft app.

And then, the second thing is we just launched—just launched a mobile app. And so, there’s a big trend with students wanting to engage and buy via mobile. So, that’s the second place where we’re investing in order to help our creators build businesses faster.

AHMED GHARIB: Great. So, you mentioned removing friction from the checkout process. How are you going about doing that?

PETER FITZPATRICK: So, there’s a few different metrics that matter most. But the first one we focus on is, how long does the checkout take to load and transact? And so, our engineers put a lot of time and effort into reducing that as much as they can.

The second thing is, can we remove the checkout in some stages altogether? So, subscription payments are really helpful for that.

And then, the third is we’ve just implemented a bunch of the payment methods that you’ve talked about, which significantly reduced the friction or the amount of engagement from the student to actually check out.

AHMED GHARIB: Yeah. Maybe digging in a little bit more on the payment methods, how are you balancing investing in each of these payment methods against all the other initiatives that you have? And, you know, your engineering capacity overall. Especially during these, you know, trying times.

PETER FITZPATRICK: Yeah. Well, so, we have a pretty simple heuristic that we use to figure out what to invest time or R&D resources in. And it’s, what’s our best opportunity to help customers sell more or spend less time on anything that’s not teaching? And so, we go through a product process that many of you in this room are probably familiar with.

But with the payment methods specifically, it’s kind of an interesting story. They never made it to the top of that list. So, we had – we’re actually working on another big project with Stripe that will be announced later this year. And our payments team is fully focused on that. So, the PM wanted the team to focus on building this new product.

And there’s an engineer that kept putting up his hand saying, “I can do the payment methods. Let me do them.” And she was focused on the right thing. And she said, “Not right now. We’ll do that later.”

And he kind of got fed up with that conversation; and had two or three days before Christmas to just work on what he wanted to work on. And he just did all the payment methods work in that – those three days. He launched Klarna. He got Klarna, Affirm, and Afterpay all into beta in let’s say four days total.

So, it truly – one thing I’ll share is that it may not be as much work as you think it is.

AHMED GHARIB: And was that all done with the payment element? Or did you, like, add each one of these individually?

PETER FITZPATRICK: Yeah, that’s right. We’re using the payment element. Yeah.

AHMED GHARIB: What—what do you think drove that engineer to want to go add all those payment methods despite, you know, the constant pushback that they were receiving?

PETER FITZPATRICK: Yeah. Ilya, if you’re out there, thank you for all this effort. Ilya used to—has lived in a lot of places around the world. And so, I think, like, he understood how important local payment methods are to people that—that exist outside of the market that most of us live in.

And then, the second thing is the business case of it is—is really strong. So—

AHMED GHARIB: What impact have you seen come from it?

PETER FITZPATRICK: Well, there’s two big impacts. The first is that in our beta program, transactions were five times larger than the average transaction on Thinkific. So, we saw much larger transactions through buy now, pay later, specifically, than we do with card payments. So, that increase in GMV allows our customers to sell more and our fees to be greater.

And then, the second thing is that some of the payment methods are higher margin. And so, as we work to become more profitable, those higher margin payment methods are win-win. They help our customers sell more, they help students access education, and then they help Thinkific grow profitably.

AHMED GHARIB: Got it. Maybe beyond payment methods, how else are you leveraging Stripe as part of your strategy?

PETER FITZPATRICK: I’ve gotten asked this question so many times this week. The – the #1 thing that Stripe means to me is speed. So, we’re able to move far faster building on Stripe than I think if we worked with anyone else. And so, at first that was just processing payments. Then we added Billing, which was far faster than if we had gone to use a third party or built it ourself.

We’re going to integrate Stripe apps that they talked about in the keynote. And then, we’ve also got a big announcement coming later this year that we haven’t talked about yet.

So, we’ve got lots of different workstreams going with Stripe that are all focused on helping us deliver value faster.

AHMED GHARIB: That’s exciting to hear. Yeah, the—moving fast especially is a core tenet for us. So, it’s good to see that you’re getting value out of that.

What advice do you have to all the payment leaders out there, especially during these difficult times? On how – what they should focus on and, you know, continue to – to innovate?

PETER FITZPATRICK: We were talking about this a little bit yesterday. It’s been a wild few years. COVID was nuts. Particularly for Thinkific, but I’m sure for everybody in the room. And then, now interest rates are rising, which makes – banks are failing. Like, there’s so much going on. Web3 came, that was going to change the world, and then it didn’t. AI’s here. That will change the world. It probably will.

And so, there’s all these things we should be thinking about. But in my view, I encourage our team to just return to the fundamentals of what it takes to build an extraordinary business. And those fundamentals come down to, why does your company exist, and for whom? And to make sure that you’ve really got that well understood. And you’re returning to it over and over again. Why does the company exist, and for whom?

And then, the second piece is how profit—do you have a business that’s profitable? Or a business model that’s profitable. Different businesses think about that differently, but for most of us, that’s probably, how much does it cost to acquire a customer versus how much will you profit from them over their lifetime? And we’re in an environment where we need that equation to work well.

AHMED GHARIB: Awesome. Well, thank you for walking us through all that, Peter. Really appreciate having you here.

PETER FITZPATRICK: Thank you so much for having me.

AHMED GHARIB: So, we’ve learned a lot about the friction leading up to the point of purchase. But—

MARCIA JUNG: Okay, I’m back. I got those tickets. They weren’t cheap, so I’m glad I was able to use Afterpay.

AHMED GHARIB: Oh, that’s awesome. I was just about to explain how the customer experience doesn’t really end at the checkout. Do you think you could take it from here?

MARCIA JUNG: Sure. Thanks, Ahmed.

AHMED GHARIB: Of course.

MARCIA JUNG: I mentioned this earlier, but many businesses, when they think about payments, are really only thinking about what’s on their checkout pages. And this is also where a lot of businesses miss out.

Immediately after a customer hits that Buy button, the balance between customer experience and fraud becomes a delicate one. Card payment details collected during checkout are routed to the customer’s issuing bank to make a real-time decision. And it’s here that issuing banks decide whether to accept or decline the transaction. And unfortunately, in this case, like many legitimate transactions, this one didn’t pass the test.

And industry experts estimate 75% of suspected fraud declines are on legitimate customers. And the resulting cost to your business can be enormous. False declines cost businesses an estimated $443 billion annually.

And we see false declines getting more challenging for a few reasons. First, less information is available to issuers. On one hand, customers expect faster and easier checkouts, in seconds or less. Where you don’t always collect zip codes or CVC, for example. And that can mean less information gets passed to the banks to make an approval decision.

And on the other hand, issuer appetite for risk is sharply decreasing at this macroeconomic environment. So, issuers actually want more information to make decisions. Information they might not be getting from faster checkouts.

Secondly, there’s more fraud. 64% of business leaders like you report that it’s harder to fight fraud than before the pandemic. And new types of fraud are constantly popping up, like card testing attacks. 40% more businesses are experiencing card testing attacks than before.

And when there’s more fraud, it means that more accounts are being compromised, and then more new cards need to be reissued. And then, in turn, customers are forced to update their card details across the myriad services, platforms, retailers that they use, if they can even remember them at all.

To add to the complexity for businesses, each of the 15,000 issuers worldwide have different decision-making criteria and regulations for how information about payments should be communicated, with SCA regulation in Europe being a canonical example of this.

All of this can result in even more false declines and an overall poor customer experience. With almost half of decline reasons an opaque “do not honor,” businesses are often left in the dark about why their transactions are being declined, and so are consumers.

So, let’s hear what fraud and declines are like for them.

[Video playing.]

ROSENA NELSON: Yes, I have had my credit card number stolen, which is weird because it’s usually in my pocket. I’ve never lost it.

HIPPOLYTE PETIT: My account had been charged, like, 22 times by this store in southeast Asia, where I’ve never been yet.

I had my identity stolen. They ended up using my credit card information for things that I had nothing to do with.

WEI XIN: Yes. And I—I don’t really know the reason why.

HIPPOLYTE PETIT: It usually makes you feel not too good, right? It makes—it feels like they are doubting your capacity to pay.

KYLE STEVENS: The purchase was for a higher amount. It made for an annoying experience.

BRITTANE ROWE: I check my bank on my phone, you know, check the app immediately. And I’m like, what’s happening? If it’s something I don’t need, then I’ll just pass it and, you know, skip the transaction.

KYLE STEVENS: Overall, I know it was for my benefit, even if the process was a little infuriating at the time.

HIPPOLYTE PETIT: I know that poor customer experience usually leads people to tell others. And guess what? I did the exact same.

MADDY GAIMAN: Honestly, if a retailer doesn’t have a good payment experience, like, I don’t shop there.

MARCIA JUNG: As we heard, fraud and declines are a frustrating and an anxiety-inducing experience. Britt was checking her banking app immediately. Kyle described his experience as infuriating. And like most customers, Wei had no idea why she’d been declined at all.

I’ve already mentioned the costly impact of false declines, but this impact is even bigger than you might think. And here’s why. Historically, conversion is measured transaction by transaction. But we think there’s a better way to think about false declines. For example, if nine out of 10 customers are approved, then you’ve only lost one transaction, right? Not exactly.

Maybe that declined customer had the potential to buy two times or five times more than other customers. Maybe they had the potential to be a repeat loyal customer for your business. Since each customer carries a different lifetime value, it’s important not to lose a single one of them, especially since 40% of customers report that they won’t do business with a business that falsely declined them previously.

Not to mention the reputational cost to your brand. Just like Hippo, people talk, and they will tell their friends and their families if not the entire internet about their bad experience.

This is why you should be thinking about payment acceptance as a part of the overall customer experience. Because even a half a percentage increase in acceptance rate can amount to millions of dollars for your business. But we recognize that not all businesses have the resources or scale to solve this type of problem.

And this is why Stripe developed machine learning-based tools and cultivated deep industry partnerships that not only help prevent fraud but improve auth rate and reduce costs.

When it comes to fraud, Radar’s machine learning is incredibly accurate. And that’s because it’s trained on hundreds of billions of data points across the entire global Stripe network. So, even if a card is new to you, there is a 91% likelihood that we’ve seen it before. And this means that we’re able to make more accurate fraud determinations based on that history.

And this is also why Stripe partners directly with major US issuers like Capital One and Discover via our Enhanced Issuer Network. We now securely share Radar fraud scores with participating issuers to help them make more accurate decisions. And it’s working.

Stripe users automatically benefit from this novel approach, and large users are seeing an up to 1–2% boost in auth rate on eligible volume.

Now, once a transition clears the fraud check, our suite of payment optimizations ensure that the customer experience doesn’t suffer for other reasons. To avoid those annoying manual reentry of expired or lost card details, we’ve made some significant improvements over the past year.

We’ve expanded Visa and Mastercard network token support to all of Stripe’s global markets, including 36 new markets. We’ll also be launching network token support on American Express in the next few months.

And finally, real-time card account updater is now available globally. Together, these products help ensure that you don’t lose out on revenue due to stale cards, all without hassling your end customer.

Now, in situations where additional authentication is needed either to prevent fraud or to satisfy regulatory requirements, it’s critical to do so in a way that’s user friendly and protects overall conversion. Remember, we’ve got this far. We don’t want to lose them now.

So, to help ensure the best possible customer experience, Stripe introduced delegated authentication. So, European customers can authenticate using FIDO biometrics like fingerprints or Face ID so that they no longer have to shuffle between umpteen different screens or apps just to complete checkout. And this has made the authentication process 60% faster and increased conversion by 7% when using Stripe’s delegated authentication.

Finally, even when a payment is declined, Stripe uses adaptive acceptance to dynamically retry the payment in real-time, recovering 15% of those retried transactions, all before your customer bears the brunt of a bad decline.

And within the last year, these payment optimizations have generated billions of dollars in incremental revenue for our users and, importantly, saved many customers from a frustrating experience.

To hear more about how to balance fraud and authorization, I’d like to invite two industry partners to join us. Please join me in welcoming Kristin Gomes from American Express and Jonathan Borman from Capital One.

Thanks for joining us. Could each of you start with a quick introduction about your roles at Capital One and American Express?

KRISTIN GOMES: Sure, I’d be happy to. Thanks for having us. My name’s Kristin Hoyne Gomes, and I lead several teams responsible at American Express for fraud risk consulting with our merchant population as well as our network banks, issuers, and acquirers.

And I also lead data science for a division of American Express called Accertify that provides fraud risk protection for ecommerce clients.

JONATHAN BORMAN: And hi, I’m Jon Borman. I am the head of fraud partnerships at Capital One. You can think of that as a collection of small startups that we’ve built within the walls of Capital One. Our shared mission is, how can we transform the payments industry? What can we do to drive exponentially better results in terms of authorization rate and fraud deterrence?

And the way in which we do that is we go out into the ecosystem and partner with companies like Stripe. You know, everyone in the payment stack; fraud risk providers, merchant acquirers. Our directive with merchants to really drive the next set of transformational change.

MARCIA JUNG: Great. Earlier on, I mentioned that 40% of customers won’t do business again with a service or a business that has falsely declined them. How do you all manage, you know, like, false declines with fraud?

KRISTIN GOMES: Great question. So, I would say at American Express, first of all, we think very hard before we make a fraud risk authorization decline. We look at literally hundreds of features to try to make the best assessment possible. Because we want that sale to go through. That’s what the consumer wants, that’s what the merchant wants.

So, first of all, we think very hard about it. When we feel like we have to because the risk is so high, we focus on ensuring that it’s an easy customer experience. So, if it really is the true customer, they have an easy way to resolve the fraud decline. And we do this through sending a text message to our card member and saying, “Did you complete this transaction?” And if they did, they can easily say “yes” through text messaging, and it’ll come back to our system.

We send them a text again that says, “Go ahead and reattempt that—that transaction, and we’ll approve it.” And so, they send it through again. And if it’s a true card member, they’re able to have the transaction approved.

So, two things that we think about. First is only declining when we really have to. And second of all, if—trying to make it an easy card member experience if it really was them, to enable the sale.

JONATHAN BORMAN: Yeah. And what’s interesting is that is exactly what we do at Capital One, as well. The only other thing I’ll—I’ll add is that we’re actually all on the same team here, together. We want the exact same outcome, and that’s to approve as many good transactions as possible while protecting our shared customers.

The cost of a decline, you know, as an issuer, is pretty painful to us, too. Right? Just like a merchant doesn’t want that transaction declined because they might lose that customer. As an issuing bank, we might lose that customer. They might pull a different card out of their wallet or stop using their account or—or close that account.

So, we actually have the exact same incentives here. Let’s approve the good stuff and get rid of the bad stuff.

MARCIA JUNG: That’s great. What do you find so challenging about this space? Or what makes the problem so hard?

KRISTIN GOMES: I actually don’t think that fraud risk management is hard. I think that we are all working together, and the more information that we are able to have at the point of transaction, the more we can really make this a good experience for our end consumers and for our merchants.

JONATHAN BORMAN: I—I think it’s a little hard. To me, the hardest thing of this entire experience and—and what I guess many—many people might not actually know is that when an issuing bank is trying to make a decision—should I approve or decline this transaction? There’s actually very, very little data that is given to the bank to make that decision. We might see, hey, this is a transaction on this account at this merchant. Here’s the merchant category code; they sell sporting goods, as an example. And here’s—here’s the dollar amount of the—of the transaction.

That’s pretty much it. That’s all we’ve got to work with. Now, as an issuer, we have a ton of data about the history of our customers. We might know what you like to do, what your typical shopping patterns are. Does this seem normal? But we’re not actually getting a lot of data about the actual transaction itself. And that’s what makes it harder to make a really accurate and intelligent decision.

MARCIA JUNG: Good. I—I love the optimism in terms of finding a path forward, but I’m hearing a consistent theme about, you know, gathering more information, getting more context to make better decisions.

And I think that was a lot of the motivation behind why Stripe launched the Enhanced Issuer Network, which is, again, a set of partnerships with major US card issuers where we share Radar scores to help issuing banks make better decisions.

Jon, specifically for Capital One, how has Enhanced Issuer Network benefited you all?

JONATHAN BORMAN: It’s been transformational. We see incredible results. Something like we’re able to reduce over half of our false positive declines while also stopping more fraud. Right? Like, a huge win-win outcome for everybody.

It’s really interesting. Right? Like, the silly, dumb example that I use to explain why data sharing works in this environment is, imagine you’re trying to predict the weather. And you have one person who predicts the weather just by looking at atmospheric pressure. I don’t know how weather works. But let’s say just using atmospheric pressure to try to predict the weather.

Another person goes outside and looks up at the sky and says, “I don’t know. It’s going to rain.” Each of those predictions might be a little bit accurate. But together, if you could look at the atmospheric pressure and look at the sky, it’s going to be a lot better. And that’s sort of the core thesis behind data sharing. Doing it in a safe and compliant way. And why getting a Radar score from a company like Stripe is so powerful for us as an issuer at Capital One.

MARCIA JUNG: And just to dig in on the Radar score, why—why does Capital One find the Radar score so valuable?

JONATHAN BORMAN: Two reasons. Number one, it’s good. So, that helps. But Number two is because it’s different. And sort of the—going back to the example of, like, looking at the clouds and reading pressure. Right?

As—as Stripe is evaluating a transaction to determine whether or not it’s fraudulent, it’s looking at all this interesting information about, like, what’s happening on the checkout page. Right? Like IP address, device information. Like, all this really intelligent stuff. And that’s importantly very different from what we as the issuer see.

And so, if you can combine those two things—imagine, like—you’ve all had a false decline on your platform, or maybe as a customer. And you might say, like, “Why did the bank decline this?” Well, maybe there’s a way to share all that information. Maybe a transaction was made, you know, with a stable IP address. And maybe it’s the first time it’s the Capital One card for this transaction.

So, basically what happens is Capital One might evaluate a transaction and say, like, “That’s kind of fishy.” But Stripe is over here. “Hey, guys. This is really safe. Trust us!” And we’ve got hundreds of millions of transactions where we’ve built that trust. And it changes our mind, and we make a different decision. And it’s really powerful because it’s different.

MARCIA JUNG: It’s—it’s great to hear that you’re finding the Radar signal so valuable. And again, just how it’s augmenting your decision making.

Kristin, just for you, what are other opportunities that you see in sort of us collectively as an ecosystem jointly fighting fraud and improving authorization rates?

KRISTIN GOMES: Yes. So, at American Express, we have a solution that we call enhanced authorization. And that enables merchants to send through additional information for each authorization request. Things like Email address and IP address, billing and shipping information. And as that data’s sent through, we’re able to dynamically evaluate it and compare it to past transactions as well as information on our card members’ files.

So, when that information is able to be sent through, we see an increase in approval rates and a decrease in fraud rates. And Stripe has been an excellent partner in facilitating for merchants to be able to send that data to American Express. And we—we see the information in about 50% of all of our Stripe transactions.

So, if you’re not sending that today and you’re a merchant in the room, I’d strongly encourage you to consider sending it. Because it really enables us to leverage the information to make a better risk decision.

MARCIA JUNG: I—I think this is a great example about how each party in the ecosystem is able to add value along that chain. I think as an acquirer, we want to make it easy for our users to be able to pass this type of information to you all so you make better decisions as well.

We also just mentioned there’s an increase in fraud vectors and sophisticated fraud attacks that are happening, as well as just other trends in market. What are some of the other opportunities or challenges that you all see going forward in terms of fighting fraud and, again, like, reducing false declines?

KRISTIN GOMES: Well, at American Express, we think—like I said, we invest very heavily in fraud risk management, both in people and capabilities and in systems, and in our partners. We’re all partners together in fighting this external bad together. So, how can we all work together?

At the division of Accertify, which is a division of American Express that works specifically with ecommerce clients, we’re seeing an increase in trends of credential stuffing, of credit master attacks, where criminals are writing programs to try to roll card numbers and find ones that are valid.

As well as account create attacks. So, when criminals attempt to create a whole bunch of accounts at merchant’s website in order to then either age them or sell them to use later. So, American Express has developed ML models to help merchants try to fight this – patterns that are existing in the marketplace.

And we ask for all of your help as part of the community together to ensure that we’re sharing the appropriate amount of information to make the best decisions.

JONATHAN BORMAN: Yeah. I’d say at Capital One, I think one of the things that we’ve learned is that fighting fraud can sometimes be a little bit like Whac-A-Mole. You guys remember that old arcade game where you, like, smack one thing and then it pops up at another place.

And so, one of the things that we’ve tried to do is actually zoom out. And instead of chasing the latest fraud trend, it’s actually find the points of leverage where we can create transformationally new capabilities that will stop the future fraud attacks that we haven’t even thought of.

And for us, that’s data sharing. That’s going directly into the ecosystem, exchanging information, to solve a whole bunch of things. We’ve talked a lot about how to do that for authorizations. There’s actually a lot of other areas where we can partner directly, too.

I think merchants are always surprised to hear me say this as an issuing bank, but we hate chargebacks. We hate that entire experience. It’s super costly and terrible for customers. And so, there’s a whole bunch of great things that we can do by collaborating directly to just make the entire dispute process way more effective, get to better outcomes, and just make it cheaper for everybody, as well.

So, that’s the next place that I’m really excited about to—to really disrupt.

MARCIA JUNG: Well, Jonathan, Kristin, thank you so much for your time. Again, I—I think we at Stripe are super excited about this partnership and look forward to collaborating and innovating in this space. And again, just moving the entire ecosystem forward.

KRISTIN GOMES: Great.

MARCIA JUNG: Thank you.

JONATHAN BORMAN: Thanks.

KRISTIN GOMES: Thank you. Thank you.

MARCIA JUNG: Hey, Ahmed. Nice jersey! Great. Do you need a minute?

AHMED GHARIB: No. There we go. I’m done. I just used Link.

MARCIA JUNG: Nice.

AHMED GHARIB: Should we finish up the talk so everybody else can go buy their tickets?

MARCIA JUNG: Sounds good.

AHMED GHARIB: If there’s one theme that’s been echoed throughout our time together, it’s that we’re in a different world than we were just a few short years ago. Businesses are dealing with higher costs while consumers are spending less and wanting more. Which is exactly why Stripe has built an end-to-end payment solution.

During online checkout, we help increase conversion and remove friction. And that extends to in-person check out as well.

MARCIA JUNG: Post-checkout, we help your business balance fraud prevention and authorization to ensure that you’re not losing money to fraudsters or declining legitimate customers. And underpinning all of this are data and reporting on lost insights so you can be proactive about your payment strategy. Together, these products improve customer experience and increased revenue at every stage of payments.

At a time when growth is harder to come by, we’ve shown you that your payments experience is your customer experience. So, focus on creating experiences that encourage customers to not only cross the finish line, but to return often and enthusiastically.

Thanks again for your time, and head to the payments conversion booth to get started.

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