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6 Fraud KPI Metrics You Need To Be Tracking

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedMay 20222 min read

Tracking fraud KPI metrics is key to getting a full picture of your business’s fraud management performance. Below, we’ll take you through the most important KPIs you should monitor in order to shape your fraud prevention strategy.

6 fraud prevention KPIs

Without further ado, let’s delve into the top 6 metrics for measuring fraud in your business.

1. Fraud rate

Fraud rate refers to the number of cases of known fraud relative to overall sales.

It only takes into account approved transactions which were found to be fraudulent. It doesn't, therefore, take into account transactions that were declined due to suspected fraud.

2. Incoming pressure

The fraud KPI, incoming pressure, is expressed as a percentage and refers to the number of transactions attempted which were later proven to be fraudulent. It’s a good indicator of how many fraud attempts have been made, however it is rarely 100% accurate as some slip by undetected.

3. Final approval rate

The final approval rate reflects how many transactions received an approved status. This is a useful metric for gauging how many non-fraudulent transactions were successful, however it doesn’t take into account authentic transactions that were falsely declined.

If you have a low final approval rate, but a high rate of false declines, for example, then your approval rate doesn’t actually reflect high levels of fraud.

4. Precision

Expressed as a percentage, precision reflects the number of fraudulent transactions proportional to the total number of declined transactions. It is a useful metric for determining how accurate your decline system is - and can indicate whether or not you are turning away authentic customers. Naturally, this is something you want to avoid, so a precision value demonstrating low fraudulent transactions to total declines is an indicator that the system should be reconfigured.

Note also that some fraud cases may slip through unnoticed, so precision rates should always be taken with a pinch of salt.

5. Recall

Sometimes referred to as the catch-rate, recall is the percentage of fraudulent transactions that were both declined and tagged as fraudulent. This is therefore a very useful metric when it comes to understanding how much fraud a business is dealing with. However, once again, it doesn’t take into account fraudulent transactions that go undetected.

Having precise and up-to-date software which has a high success rate when it comes to detecting fraud can help make your recall rates more reliable.

6. Decline rate

The decline rate is the percentage of declined transactions proportional to the total number of transactions. It therefore doesn’t specifically reveal rates of fraudulent transactions, but can give some indicator of how many transaction attempts were suspected to be fraudulent.

For the decline rate to be a useful metric, it must be considered alongside recall and precision rates. In combination, they can reveal how many transactions were actually likely to have been fraudulent.

Being able to comprehend why a transaction has been declined is key to being able to reduce decline rates in the future. This is why metrics should be used in tandem to paint a more informative and authoritative transactional picture.

Fraud protection with GoCardless

GoCardless can help reduce your fraud rates in several ways. Firstly, we offer an anti-fraud product Verified Mandates, which is highly effective in cashing payment fraud in the act. It does this by verifying that customer bank account details are genuine, all without compromising the checkout experience.

Another way to tackle fraud is to use pull payments, rather than relying on customers to make push payments. GoCardless enables businesses to collect payments directly from their customers' bank accounts, virtually eliminating the opportunity for fraudulent payments. Additionally, it can also reduce late payments and help you get paid twice as fast.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.