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Turning Foes into Allies: Capital One Collaborates with Fintech Giants Stripe, Adyen to Combat Fraud

The longstanding rivalry between traditional financial institutions and fintech companies has now taken a surprising turn. In a groundbreaking move, Capital One has forged a partnership with payment powerhouses Stripe and Adyen to introduce a free product aimed at reducing fraud, the financial services giant revealed in an exclusive interview with TechCrunch.

Capital One's head of fraud strategy, Jon Borman, highlighted the challenge the company faced in combating fraud due to a lack of data. To address this issue, Capital One developed an open source project named Direct Data Share, an API allowing merchants and payment processors to share real-time transaction data. This is particularly crucial for e-commerce transactions, which are more vulnerable compared to in-person purchases where users can verify credit card information.

By utilizing the Direct Data Share platform in collaboration with Stripe and Adyen, Capital One can serve as a central hub for data sharing, enabling the identification of fraudulent activities across multiple channels. Borman explained that this joint effort allows for a more efficient fraud prevention system that benefits both customers and merchants.

Merchants stand to gain from increased fraud detection capabilities, as global e-commerce fraud losses are projected to reach $343 billion by 2027. Furthermore, the collaboration aims to reduce false declines, ensuring legitimate transactions are not incorrectly flagged. Notably, merchants do not incur any additional fees for this enhanced protection, with over a billion dollars in transactions already approved through the partnership with fintech companies.

Capital One has been working closely with Stripe on this initiative since early 2023 and recently expanded the collaboration to include Adyen. Particularly with Stripe, Capital One leverages the API to receive fraud scores from Stripe's Radar product, enhancing accuracy in transaction approvals.

A similar sentiment was echoed by Trevor Nies, Adyen's SVP and global head of digital, who emphasized the mutual benefits of the partnership. Adyen's merchants benefit from improved authorization rates and reduced chargebacks, while Capital One's cardholders experience fewer false declines and lower instances of fraud.

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