Fintech Stripe Launches Enhanced Issuer Network

Stripe, a financial infrastructure platform for businesses, announced the launch of Enhanced Issuer Network, a set of partnerships with major US card issuers.

Stripe provides secure access “to transaction fraud scores from Stripe Radar, its fraud prevention solution, through an encrypted pathway with issuers including Capital One and Discover.”

Enhanced Issuer Network helps issuers “decrease fraud, reduces checkout frustration for consumers, and increases payment authorization rates for businesses.”

Every year, Stripe claims it “processes hundreds of billions of dollars for millions of businesses around the world.” Using proprietary machine learning techniques “trained on this transaction data, Radar assigns each transaction a score from 0–99 based on the risk that it’s fraudulent: 0 being the lowest risk and 99 the highest.”

Industry research reveals “that false declines—legitimate transactions declined as suspected fraud—cost US companies more than $11 billion in lost revenue in 2021.”

They also “frustrate customers: 33% won’t shop somewhere they’ve had a purchase inaccurately declined.”

Issuers’ fraud models are “based on a subset of transaction information.”

By contrast, Radar’s algorithms “train on data from millions of global businesses and every layer of the financial stack, from checkout flow data to bank information.”

Even if a card is new to a specific business, “there’s a 91% chance it’s been seen before on Stripe.” When Radar fraud scores are “used in tandem with the information issuers already have, issuers can increase the accuracy of their own authorization processes and confidently approve more legitimate transactions.”

Enhanced Issuer Network “enables issuers to incorporate Radar fraud scores into their own authorization tools.”

Capital One does this “with its Enhanced Decisioning Data API.”

Sarah Strauss, head of customer services and strategy at Capital One, saod:

“We’re thrilled to be a launch partner for Stripe’s Enhanced Issuer Network. With Capital One’s Enhanced Decisioning Data API, we can securely receive fraud scores from Stripe Radar that improve accuracy during the transaction authorization process. In particular, this makes legitimate transactions more likely to be approved. The partnership has already resulted in hundreds of millions of dollars in recovered revenue for businesses.”

Businesses running on Stripe “benefit from Enhanced Issuer Network with no additional integration work.”

On average, they see “an 8% reduction in fraud and a 1–2% authorization rate uplift on all eligible volume processed with Capital One, Discover, and other major US issuers.”

For large businesses, even small improvements in authorization rates “can translate to millions of dollars in additional annual revenue.”

Tom Holman, head of product for cards acquiring at Stripe.

“Stripe’s Enhanced Issuer Network delivers more money right into a business’s top line, without any effort. For consumers, it’s now less likely you’ll be a victim of fraud, and less likely you’ll have to experience the frustration of an issuer declining your legitimate purchase.”

The publishing platform Substack is “a Stripe user that is already benefiting from Enhanced Issuer Network.”

Jairaj Sethi, cofounder and chief technology officer at Substack, said:

“Thousands of writers and podcasters make their livelihood on Substack. With Enhanced Issuer Network, Stripe is making sure as many legitimate transactions as possible are approved so that readers can subscribe to their favorite independent publications and writers can get paid.”

Enhanced Issuer Network is “part of Stripe’s suite of payments optimization tools, which includes Adaptive Acceptance, Smart Retries, network tokens, and card account updater.”

Together, they help “increase authorization rates and reduce false declines for businesses.”

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