Outliers

Understanding Outliers and Outlier detection

What Are Outliers?

Outliers are transactions that exhibit higher fees compared to expected benchmarks. The benchmarks are typically the pricing that you have agreed with your payment processor. In the absence of this information, Reveal uses our internal benchmarks and algorithms to detect outliers in your payments.

Why Do Outliers Happen?

Outliers can occur for several reasons, including but not limited to:

1. Interchange Downgrades

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

• A Visa transaction is supposed to qualify for a lower rate but is 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-Based Interchange Discounts

Utilizing 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 miss out on these discounts.
• Example Rate Change: Without 3DS: 2.20% instead of expected 1.50%.

3. Network Token Discounts

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%).

5. Cross-Border Transactions

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

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, these transactions are flagged as outliers. You can drill down on these outlier transactions to investigate further and address any discrepancies or unexpected charges.