Why Monitoring Merchant Risk Needs to be Elevated

Vinodh Poyyapakkam

February 6, 2023

Risk monitoring is crucial to successful merchant risk management.

However, in order to do things by the book and combat non-fraud losses, companies have to go through unscalable tasks in the face of rising labor costs.

That’s why we built Coris.

One aspect of Coris is next-gen risk infrastructure that automatically monitors for any changes in the quality of a business — from social media trends to changes in business model — and instantly alerts companies on how to take action.

Keep reading to hear how we expertly handle the ins and outs of risk monitoring and assist companies in intercepting serious loss potentials.

“Before Coris, people were basically shooting in the dark with risk monitoring, just looking for spikes in internal data. Now, risk monitoring with Coris is like having CCTV on your small business customers at all times.”

Why Manual Risk Monitoring Lacks Crucial Information

The biggest pain point companies confront with risk monitoring of merchants is that they’re limited to using in-house, derivative data.

That means they can only monitor after-the-fact patterns around variables like payment volumes and disputes. And they certainly can’t preempt small businesses under stress let alone catastrophes.

That’s the biggest weakness of derivative data: It tends to yield laggy indicators.

By the time you receive chargebacks or high refunds on a given business, it’s too late to act on that information. The customer in that instance already wanted their money back and got it.

That’s why risk monitoring of merchants is so involved: If the company isn’t also keeping track of the outside world and customer perception, they’re flying blind.

Coris constantly hears that Vertical SaaS companies suffer their biggest losses in non-fraud cases — when they can’t predict a deteriorating business and are hamstrung by blind spots in their internal data.

Fortunately, Coris has a solution that’s custom-built for that exact frustration.

Manual Risk Monitoring = Time-Consuming & Unscalable

When companies receive early warnings about stressors in their portfolios, they can mitigate risk on their end by holding funds or taking other mitigating actions. They can protect their portfolio and avoid massive losses.

However, they also struggle with this proactive monitoring and external data gathering.

That’s because doing so on their own means manually searching businesses online and combing through reviews and articles — seriously time-consuming work.

One organization can’t give that treatment to thousands of businesses.

Before Coris, there wasn’t an automated solution on the market to do the work for them.

Building Coris: Your Solution for Proactive Risk Monitoring

Many of us on the Coris team came from WePay, where we saw these pain points play out in real-time — particularly once COVID hit.

  1. Event merchants had to face sweeping cancellations of live events.
  2. Event holders tried to refund customers, but they’d already spent the ticket money planning the events.
  3. As a result, payment processors like WePay ended up taking a hit.
  4. WePay had to assign employees to manually monitor businesses around the clock every day for a few months.

There were zero automated solutions they could use to intervene. If there had been one, it could have scraped and found any online announcements along the lines of: “We’re going out of business.” “We can’t refund anyone anymore.”

The lack of transparency into this sort of info represented a massive gap in the market.

Even before the pandemic, Coris employees who’d worked at payment processors knew certain industries were especially prone to risk due to their business structures.

For instance, with the event industry, merchants often don’t receive payouts (these can go up to millions per event) until after each event has passed. They have to pour so much of their own money into the build-up, and it can’t be recouped if the event doesn’t happen.

At WePay, we were constantly monitoring the merchants to avoid these catastrophes.

So, we decided to finally productize the solution for proactive exposure management.

“Derivative data provides laggy indicators. By the time you start getting chargebacks or high refunds on a given business, it’s too late to act. The business is probably already going out.”
Wrapping Up

How to

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Elevate Small Business Risk Management

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