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GoCardless launches new payment fraud tool powered by open banking

By Joy Dumasia

March 23, 2022

  • Account Information Services
  • API
  • API Banking
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GoCardless, a leader in direct bank payment solutions, has launched Verified Mandates in the UK, a feature within its global bank pay platform that combines the Account Information Services (AIS) capabilities of open banking with a direct debit to stop fraud before it happens. This represents a new approach to tackling the age-old issue of payment fraud when “customers” intentionally try to receive goods or services from merchants without paying for them.

The problem is particularly acute for recurring revenue businesses that collect payments via direct debit, with research indicating three in ten merchants (30%) consider payment fraud the primary threat facing their business today. Despite this, over half of the businesses (55%) say they still provide goods or services before confirming if a customer’s bank information is authentic and true. 

Until now, businesses that are especially exposed, including those that invoice, offer free trials or ask for payment after usage, didn’t have much recourse. But the introduction of Verified Mandates represents a new era of intelligent fraud prevention that doesn’t compromise on customer experience.

Verified Mandates works in a simple, three-step process which can be completed in less than a minute; they are: 

  • A customer who enters a merchant’s checkout flow will be asked to complete a standard direct debit mandate creation form. 
  • They’ll be prompted to choose their bank, log into their online banking platform using their usual method, and authorise the setup of their direct debit mandate. 
  • The merchant will receive instant confirmation of the successful verification, and the customer can complete the checkout flow as usual. 

Besides the seamless checkout experience, payers also gain peace of mind: the chances are much lower that a fraudster would complete this authentication process to make unauthorised purchases, compared to using stolen card details. 

Hiroki Takeuchi, Co-Founder and CEO at GoCardless, said“We’re proud to introduce a new way to tackle payment fraud, a primary threat for businesses everywhere. By taking advantage of the latest in open banking technology, we’ve created a feature which helps businesses protect their hard-earned revenue while meeting the high standards consumers now expect for any checkout process. We see Verified Mandates as the latest example of the power of open banking, enabling payments that offer a better experience for everyone.”

Daniel McClure, Co-Founder and VP of Technology, Cuckoo Broadband, said: “We’ve been looking forward to the availability of Verified Mandates from GoCardless it will give Cuckoo added security as we grow and expand locally and internationally. Verified Mandates is an easy and simple way to ensure a seamless customer experience whilst protecting Cuckoo from fraud.”

Recently, IBS Intelligence reported that GoCardless, a leading FinTech in direct bank payment solutions, announced that it had secured a Series G funding round of USD 312 million, making it the latest European and UK tech unicorn at a valuation of USD 2.1 billion. 

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