PayU

The Challenge: New Regional Markets Invite New Fraud Risks

PayU provides payment solutions for over 450,000 merchants and counting. To sustain its scalability, the firm needed swift and error-proof fraud management, along with regulatory compliance. Among the key considerations was how to effectively manage fraud prevention capabilities, especially in high-risk regions like Latin America. Especially when diverse regulations, local currency demands, and a wide range of payment preferences required a flexible, adaptable approach to fraud prevention. PayU faced a critical strategic decision. The company could develop a fraud prevention solution in-house utilizing its own highly advanced insights into the fraud trends and patterns. The other option was to outsource its development while ensuring its infrastructure could scale to meet its rapid growth without compromising on performance, security, or reliability.

 

The Solution: A Hybrid Approach to Fraud Prevention

PayU had an existing partnership with Feedzai for its Transaction Fraud for Acquirers solution and decided to expand this relationship to address new challenges. The company was drawn to Feedzai based on two key criteria. First, Feedzai’s reputation in the market by other payment experts. The second criteria that appealed to PayU was Feedzai’s cloud-native infrastructure that would not require management by PayU and is capable of handling growing volumes of transactions. PayU opted for a hybrid “Buy2Build” approach that combines Feedzai’s technological capabilities with the company’s in-house expertise and operational knowledge. This approach allows PayU to customize fraud strategies for individual merchants or segments, while Feedzai supports the technological foundation and strategic guidance for addressing specific fraud scenarios.

“Ours is a fast-growing business and we need the flexibility of growing our volumes,” said Andrzej Bassara, PayU’s Chief Operating Officer. “We need to feel confident in throwing additional volumes that will not cause the transaction processing times to suffer and that keeps the cost of the solution under control.”

Results Achieved: LATAM Fraud Rates Slashed in Half

Feedzai played a pivotal role in PayU’s success across over 40 high-growth markets, enabling enhanced fraud prevention, operational efficiency, and scalability. With Feedzai’s advanced detection systems, PayU reduced fraud rates in Latin America by half, boosting trust among merchants and consumers.

Feedzai’s advanced features, such as out-of-the-box functionalities for complex text field attacks and geolocation enrichers, have been instrumental in preventing significant fraud losses. Real-time data visualization insights have also empowered PayU to gain valuable business intelligence and quickly respond to emerging threats.

The cloud-based platform ensured seamless transaction monitoring, even as volumes scaled, while its customization capabilities allowed tailored fraud strategies for diverse merchant profiles. By supporting multiple currencies and card-based payment methods, Feedzai helped drive revenue growth, streamline operations, and enhance customer satisfaction, positioning PayU for sustained global expansion with secure and efficient payment solutions.

 

Enhanced Machine Learning Automation

PayU’s fraud prevention strategy has also been significantly enhanced by Feedzai’s machine learning capabilities. By automating routine tasks and identifying complex patterns, the system has reduced manual effort and improved accuracy. This has allowed PayU to focus on high-value activities and deploy resources more strategically.

“We use Feedzai as our primary fraud strategy system”, said Daniela Sanabria, Fraud Prevention and Data Science Manager at PayU. “A machine learning model and rules support detection, case management gives control over our work, and an insights-analytics module allows real-time recognition of trends and risks.”

Additional results achieved include:

• Operational stability
  Day-to-day operations, including transaction monitoring, are able to run without disruptions, even as transaction volumes rise. The system can adapt quickly to changing fraud trends and adjust parameters to improve operational efficiency.
• Enhanced security
  Enabled merchants are able to handle higher volumes of transactions seamlessly by supporting multiple currencies and payment methods, improving their revenue growth.
• Customer satisfaction
  Improved user experience results in adaptable and user-friendly payment solutions, which in turn yields higher merchant retention rates and increased consumer satisfaction.
• Operational efficiency
  PayU can streamline compliance and operational processes across different regions, reducing overhead costs and improving overall business efficiency.
• Scalability
  Built a scalable infrastructure capable of supporting continuous growth without compromising on performance or security, positioning PayU for sustained expansion. The scalable platform enables PayU to handle peak shopping periods like Black Friday and Cyber Monday without slowing down performance or requiring additional analyst resources.

Bassara added that since Feedzai’s rollout, PayU has been able to deliver more individualized experiences to customers based on their unique patterns. These tailored fraud strategies improved outcomes for diverse merchant profiles, including large retailers and small businesses.

“We started to monitor individual behaviors of each of our customers and can adjust the strategy for each customer or customer segment,” said Bassara.

Meanwhile Sanabria noted the importance of supporting rules-based systems with machine learning models.

“One example of our strategy against fraud attacks is a set of flexible velocity rules that trigger anomalies. This rule-based system complements the predictive ML model, and since we can analyze results in real time using Insights-analytics and Case Manager, we can keep this rule system up to date according to the merchant’s fraud activity,” she said. “Fraud incidents are logged in Case Manager as evidence and for future use in creating or refreshing a machine-learning model. Such a strategy has recently saved hundreds of thousands of dollars in fraud values.”

 

Conclusion

PayU’s partnership with Feedzai highlights the power of collaboration and innovation in fraud prevention. Despite initial challenges, Feedzai’s scalable and customizable platform became a cornerstone of PayU’s operations, reducing fraud rates by half in key markets in Latin America and enabling tailored strategies for diverse merchant needs. This collaboration strengthened PayU’s ability to address complex challenges, from regulatory compliance to payment processing, fostering trust and driving growth.

Looking ahead, PayU plans to leverage Feedzai’s evolving technology, including advanced data analytics and AI, to further enhance fraud detection, ensuring secure, efficient, and adaptable payment solutions across emerging and dynamic global markets.