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Sponsored: Getting ahead of game fraud before it impacts revenue

Sponsored: Getting ahead of game fraud before it impacts revenue

May 22, 2019 | By Xsolla

May 22, 2019 | By Xsolla
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Presented by Xsolla.

As a game developer, you’ll inevitably face a most formidable challenge in fraud. It comes in many forms—stolen cards, fake accounts, scammers and even “friendly” fraud, when gamers pay with relatives’ or friends’ credit cards without permission. More than a nuisance, fraud can damage game player trust, put your relationship with credit card acquirers at risk and cut into revenue and profits. Unless, of course, you know how to get ahead of it.

The good news is that you’re not the first to face off with fraudsters. Whether your game is just getting started or already up and running, you have the opportunity to learn from those who’ve already fought the battle and won—like this large MMO game platform that recently struggled with a 2% fraud rate and has, thanks to an anti-fraud partnership with Xsolla, dropped to a 0.4% fraud rate.

The high cost of a high fraud rate

At $3.6 million revenue and over 300,000 transactions each month, this MMO game platform had a lot to be excited about. But a 2% fraud rate—a big drain on revenue for an operation of that size—was cutting into that excitement. Their virtual marketplace was a frequent stop for stolen card holders determined to get real money from virtual goods. They also experienced a considerable amount of “friendly fraud” from players. As a result, they saw a really high volume of chargebacks and refunds.

Here’s where things get sticky: when merchants experience above-average fraud rates, credit card companies can place them in fraud monitoring programs. These programs typically come with fines that can add up really quickly, especially when you can be placed in multiple programs for different issues, like chargebacks, fraud, 3-D Secure fraud, and so on.

Once you’re in a fraud monitoring program, you’re also at risk of being banned by their credit card acquirer, or added to a blacklist. Once banned, it can be extremely difficult, if not impossible, to find a replacement. Credit card acquirers that do work with “high risk” merchants rely on agreements with higher fees, higher reserves and slower turnaround on KYCs—all of which can have a negative impact on your game business.

Clearly, there was a lot at stake for this game creation platform. They needed a solution for their fraud issue—one that would help them reduce fraud and protect their relationships with credit card acquirers. That’s when they turned to Xsolla.

A partner in the battle against fraud

Xsolla helps game developers launch and monetize games and game-related products all around the world. Their state-of-the-art anti-fraud solution, built specifically for the game industry, caught the attention of the MMO game platform. If Xsolla could help with their fraud issues, then the game could improve their numbers, revenue and reputation—all without eating up valuable game dev resources.

First, they enabled Xsolla as the merchant of record. This streamlined payments and, thanks to Xsolla’s support for 700+ payment types, made it easy to access new markets. Xsolla also handled compliance with VAT, local & global sales taxes, laws and regulations. This resulted in a smoother and easier operation for the game platform, even transferring risk and liability to Xsolla.

To reduce chargebacks and refunds, Xsolla took a number of steps. This included adding validation to ensure that suspicious activity—like the brute force attacks the game platform was experiencing—was not sent to the acquirer. Xsolla added partner descriptors to bank statements that made it easier for users to recognize purchases and, in turn, decrease false reports of fraud. Xsolla’s real-time notifications on refunds enabled the MMO game platform to take action as needed—blocking the specific user or withdrawing the in-game purchase, for example.

Also, because Xsolla maintains relationships with several credit card acquirers—something that would be labor-intensive for a typical merchant—they could distribute payment traffic across multiple acquirers to minimize the risks that come with high fraud volume.

Xsolla also recommended the platform integrate new in-game parameters, such as user data and stats on every transaction. This enabled Xsolla to segment users by level of trust and apply different verification filters for each segment. Xsolla also analyzed payment behavior across all Xsolla transactions to more accurately classify problem users.

Last but not least, Xsolla enabled 3-D Secure, a common verification solution provided by IPS (International Payment Systems like Visa, Mastercard, American Express, China Union Pay, JCB, and more) and supported by the majority of banks and acquirers globally. Xsolla gave the MMO game platform the flexibility to apply 3-D Secure based on several parameters such as region or payment amount.

A massive drop in fraud rate

Xsolla worked closely with the MMO game platform to understand their specific challenges and needs. Thanks to anti-fraud capabilities, custom features and overall approach to customer integrations, Xsolla crushed the game platform’s fraud rate—from 2% to 0.4%. Even better, the conversion rate stayed the same while fraud decreased—a win-win for the MMO game platform.

Of course, we all know fraudsters don’t give up easily. They’re constantly refining their tools and approaches, looking for the weak links in games. This is where the overall benefits of partnership really shine—fighting fraud is rarely a core competency for game developers but, by teaming up with a partner that makes it their business to continuously adapt to the technology and tactics of fraud, a game can stay ahead of the threats. That’s why the MMO game platform continues to work with Xsolla and why it’s worth your time to explore your own anti-fraud partnership.

To find out how Xsolla can help you fight fraud more effectively, connect with one of our game experts at [email protected].



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