Outliers

Understanding Outliers and Outlier detection

Outliers in transaction fees

Outliers are transactions that exhibit higher fees compared to expected benchmarks. These benchmarks typically represent the pricing that you have agreed with your payment processor. When this information is not available, Reveal uses our internal benchmarks and algorithms to detect outliers in your payments.

Reasons for outliers

Outliers can occur for several reasons:

1. Interchange downgrades

Interchange downgrades occur when a transaction fails to meet the criteria for its target interchange category, which results in higher fees. For example:

• A Visa transaction should qualify for a lower rate but gets downgraded to a higher tier (like EIRF or Standard) due to an AVS mismatch or delayed settlement.
• Example Rate Change: Standard Visa rate: 1.80% → Downgraded rate: 2.70%.

2. 3D Secure interchange fee impact

Using 3D Secure authentication can lead to lower interchange rates due to reduced fraud risk. However:

• If a merchant does not implement 3DS correctly or customers bypass it, they may not receive these discounts.
• Example Rate Change: Without 3DS: 2.20% instead of expected 1.50%.

3. Network token fee impact

Merchants using network tokens for transactions can benefit from lower interchange rates because these tokens enhance security and reduce fraud risk. For instance:

• A high volume of transactions with network tokens might be processed at a favorable rate (e.g., 1.60%), while transactions without tokenization fall back to a higher standard rate (e.g., 2.40%).

4. Cross-border transaction fees

Cross-border transactions typically incur additional fees due to currency conversion and international processing costs:

• A merchant usually processes domestic Visa credit card transactions at around 1.80%, but several cross-border transactions may incur fees of 2.50% or more, appearing as outliers.

Outlier detection in Reveal

To further assist in managing your payment costs, the Fees Overview includes outlier detection for transaction fees.

If the fee charged for a transaction exceeds expected levels, we flag these transactions as outliers. You can drill down on these outlier transactions to investigate further and address any discrepancies or unexpected charges.