Capital One , in partnership with Adyen and Stripe , has unveiled a new initiative called Direct Data Share (DDS), aimed at addressing fraud in the financial sector. DDS, a free and open-source solution, seeks to improve real-time authorisation decisions to mitigate fraud losses and false declines for merchants.

This partnership comes in the context of global fraud losses projected to reach USD 343 billion by 2027 according to fintechmagazine.com. According to the same source, fraudulent activities not only result in substantial financial losses but also impact the reputation and erode customer trust in affected merchants. Capital One's DDS solution has already demonstrated its efficacy, facilitating over USD 1 billion in merchant transactions that would have otherwise been declined.

According to officials from Capital One, the collaboration with fintech firms aims to prevent financial losses and combat criminal activities. By leveraging DDS, Capital One, Adyen, and Stripe can work together to thwart fraudulent transactions in real time. Adyen's SVP and global head of digital, highlighted the mutual benefits of the partnership, emphasizing improved authorization rates for Adyen's merchants and reduced false positives for Capital One's cardholders, resulting in enhanced fraud prevention.

How does DDS work? DDS operates by providing a Direct Data Share API to both Adyen and Stripe, creating a robust network to detect and prevent fraudulent transactions across various platforms. For instance, if Capital One identifies fraud at a Stripe merchant and detects similar activity at an Adyen merchant, the system can block the transaction instantaneously. By sharing evidence of positive customer history, the API helps minimise false declines, ensuring legitimate transactions are not mistakenly rejected.

The partnership coincides with Capital One's strategy to engage in strong alliances with acquirers and merchants, which signifies a change towards a collaborative and inclusive approach to fraud prevention. Fintechmagazine.com further suggests that, while the DDS initiative marks a significant advancement, its long-term impact hinges on its adoption beyond Capital One. If other financial institutions and networks embrace similar open-source APIs, the potential benefits could help support a more secure and seamless ecommerce environment.

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