As our lives shift online, our providers needs strong digital representations of each of us in order to make authentication and authorization decisions. Besides payment transactions, there are the diverse risks they must manage when, for example, we establish new credit relationships, add new payees to our online accounts, and move money in new ways. The providers of these capabilities—and often a single party offers multiple services—must be concerned with the associated risks each poses.

This is the special domain of risk and fraud management companies. In this conversation with Payfone’s CEO Rodger Desai, we focus on digital identity services and the role of the mobile ecosystem in particular. Take a listen.

Many risk and fraud vendors base their services on different data types, such as the email address, SSN, or phone number.

In Payfone’s case, it is the combination of the mobile number, the device it is connected to, and the mobile network serving it that have powerful attributes to measure against. Relevant data attributes include:

1. Tenure. How long the mobile subscriber has had the phone number tells a lot about the subscriber itself. 2. Phone’s Aren’t Free. Unlike email addresses which are cost-less, almost anything to do with a phone costs money, i.e. the service and device costs. Therefore, phone-based frauds, for the fraudster, cost money. Such hacks don’t scale as well as a card data breach. But when there is a phone-based hack, the impact on the victim can be particularly severe. 3. Lots of Activity to Examine. With 50% of American eleven year olds having phones, we generate a rich history using our phones. For billing purposes alone, that activity is tracked by the mobile network ecosystem and, given appropriate privacy controls, can be used to support risk decisioning. 4. Even More Data. Biometric unlocking of devices, behavioral fingerprinting—how we actually interact with the device user interface—and device fingerprinting—the digital portrait developed from such rich data—expand the data available for risk assessment.

The union of all this data paints a crisp digital identity once algorithmic power has been applied to it.

In this episode of Payments on Fire® we discuss the risk assessment capabilities the mobile ecosystem provides with Payfone’ CEO Rodger Desai. His long experience in mobile “phone intelligence” informs this discussion. He explains how some very large clients are using Payfone’s scoring capabilities to assess transactional and account risk while addressing the challenge of improving the user experience. Risk and convenience are often at odds. Payfone’s services are designed to mitigate that conflict.

Today’s digital identification capabilities are powerful. But fraudsters are fast moving and well funded. For the relying parties—those enterprises that take on the risk—the role of defense is a tough one. Priorities, cost, business goals, even awareness vary. Each and every party’s approach to risk assessment is unique. Risk tolerance for the same transaction will differ from bank to bank, from enterprise to enterprise.

In other words, individual enterprises can assemble strong risk assessment and mitigation capabilities while, from a systemic view, there will always be gaps to be exploited. The best we can hope in today’s environment is for each enterprise to raise its security game.