Riskified, a global leader in ecommerce fraud prevention and risk intelligence, has officially introduced Adaptive Checkout, an innovative fraud prevention and conversion optimization solution designed to help merchants maximize revenue while minimizing fraud. This cutting-edge technology aims to address a key challenge faced by ecommerce businesses: the fine balance between preventing fraudulent transactions and ensuring that legitimate customers do not face unnecessary friction or false declines.
With ecommerce transactions continuing to rise, so too has the sophistication of fraud tactics. As a result, merchants are often forced to make difficult trade-offs between security and user experience. Traditional fraud prevention systems, which primarily rely on predefined rules and binary decision-making models, often result in unnecessary declines of legitimate transactions. These false declines not only cost merchants billions of dollars annually but also damage customer relationships and erode trust in their brand.
Riskified’s Adaptive Checkout represents a fundamental shift away from these traditional methods. By leveraging artificial intelligence and real-time data analysis, Adaptive Checkout dynamically adjusts the checkout experience for each individual transaction, tailoring security measures to match the specific risk profile of an order. This ensures that merchants can confidently approve more legitimate transactions while stopping fraudulent ones before they result in chargebacks or financial losses.
A Smarter Approach to Fraud Prevention
The key innovation behind Adaptive Checkout lies in its ability to assess an order’s risk level in real-time using Riskified’s extensive global dataset, which includes hundreds of millions of transactions from merchants across multiple industries. Unlike conventional fraud detection systems that operate on rigid, pre-set rules, Adaptive Checkout continuously learns from evolving fraud patterns and shopping behaviors to make highly accurate risk assessments.
Instead of applying a one-size-fits-all approach to fraud screening, Adaptive Checkout dynamically adapts security measures based on the risk profile of each transaction. For low-risk transactions, the checkout process remains seamless, allowing customers to complete their purchases quickly without unnecessary friction. Higher-risk transactions, however, may be subject to additional security measures such as requiring the CVV code, issuing a one-time password (OTP), or utilizing 3D Secure (3DS) authentication.
How Adaptive Checkout Works
Riskified’s Adaptive Checkout operates on a multi-layered approach to fraud prevention and conversion optimization. The process includes the following key steps:
- Real-Time Risk Assessment
- Adaptive Checkout evaluates each order’s risk profile using advanced machine learning algorithms that analyze various data points, including customer behavior, device fingerprinting, payment patterns, and historical transaction data.
- Intelligent Checkout Customization
- Based on the risk assessment, Adaptive Checkout customizes the checkout experience. For low-risk transactions, the process remains smooth and frictionless. Higher-risk orders may require additional authentication steps, but only when necessary, reducing unnecessary disruptions for trusted customers.
- Pre-Issuer Fraud Screening
- Adaptive Checkout proactively filters out fraudulent transactions before they reach the payment issuer’s authorization system. This step helps prevent legitimate transactions from being falsely flagged as fraudulent by banks or payment providers.
- Enriched Order Data for Issuers
- Riskified enhances transaction data before sending it to payment issuers, providing additional insights that help financial institutions distinguish between genuine and fraudulent transactions. This results in higher authorization rates and fewer declined payments for merchants.
Solving the False Decline Problem
False declines—legitimate transactions mistakenly rejected due to suspected fraud—have long been a major issue for ecommerce businesses. Industry reports estimate that merchants lose more revenue to false declines than they do to actual fraud. These incorrect rejections not only impact immediate sales but also harm customer loyalty, as shoppers who experience a false decline are less likely to return to the same merchant in the future.
Adaptive Checkout directly addresses this issue by ensuring that good customers are not caught in the crossfire of aggressive fraud prevention measures. By applying security steps only when absolutely necessary, merchants can approve a higher percentage of legitimate transactions while still maintaining strong fraud defenses.
Industry Impact and Merchant Success Stories
Several major ecommerce brands have already implemented Adaptive Checkout and are experiencing tangible benefits. One notable success story comes from TickPick, a leading online marketplace for event tickets. Known for its unique no-fee ticket pricing model, TickPick faced challenges in balancing fraud prevention with maximizing sales.
After integrating Riskified’s Adaptive Checkout, TickPick saw a significant improvement in its approval rates. The company was able to approve an additional $3 million in transactions that would have otherwise been declined due to fraud risk. This boost in revenue was achieved without compromising fraud prevention measures, demonstrating the effectiveness of Adaptive Checkout’s ability to optimize conversions while maintaining security.
Jack Slingland, SVP of Operations at TickPick, praised the partnership, stating, “We’re excited to collaborate with Riskified in developing innovative solutions that further enhance our customer experience, lower fraud costs, and enable long-term success.”
The Role of AI in Ecommerce Fraud Prevention
Artificial intelligence plays a crucial role in Riskified’s Adaptive Checkout. By continuously learning from transaction data, AI models can detect emerging fraud tactics and refine risk assessments in real-time. This allows Adaptive Checkout to remain ahead of evolving threats while minimizing disruption to legitimate customers.
Key AI-driven capabilities include:
- Behavioral Analysis: AI examines shopping patterns, purchase frequency, and user behavior to identify anomalies that may indicate fraud.
- Device & Network Fingerprinting: AI assesses device information, IP addresses, and network data to detect suspicious transactions.
- Contextual Decision-Making: Instead of relying on static rules, AI considers a broad range of contextual factors to make more informed fraud decisions.
By combining these AI-driven insights with its vast merchant network data, Riskified is able to deliver a fraud prevention solution that is both highly effective and adaptive to real-world ecommerce challenges.
Enhancing Customer Experience and Business Growth
Beyond fraud prevention, Adaptive Checkout also serves as a powerful tool for enhancing customer experience. By reducing unnecessary verification steps for trusted shoppers, merchants can streamline the checkout process and reduce cart abandonment rates. This ultimately leads to higher customer satisfaction, stronger brand loyalty, and increased lifetime value from repeat buyers.
For ecommerce merchants, the impact on revenue growth is clear. By minimizing false declines and improving transaction approval rates, businesses can capture more sales while maintaining strong fraud defenses. Additionally, Adaptive Checkout reduces operational costs associated with manual fraud reviews and chargeback disputes, allowing merchants to allocate resources more efficiently.
Future of Adaptive Fraud Prevention
As fraud tactics continue to evolve, so too must fraud prevention strategies. Riskified’s Adaptive Checkout represents a significant step forward in creating a more intelligent, efficient, and customer-friendly approach to fraud management. By leveraging AI, data-driven insights, and real-time risk assessment, Adaptive Checkout empowers merchants to optimize conversions while maintaining robust security measures.
Looking ahead, Riskified plans to further enhance Adaptive Checkout by incorporating additional AI advancements, expanding its global merchant network, and collaborating with financial institutions to improve fraud prevention across the entire payments ecosystem.
Eido Gal, CEO and co-founder of Riskified, emphasized the company’s commitment to driving innovation in fraud prevention, stating, “As fraudsters grow more sophisticated, ecommerce merchants face the risk of losing legitimate customers through false declines, which can directly impact their revenue. Merchants raised this critical challenge with us, leading to our development of Adaptive Checkout to further optimize ecommerce conversions. By leveraging AI to assess risk and adapt the checkout experience in real-time, merchants are better able to balance fraud prevention with the need to approve as many legitimate transactions as possible.”
With Adaptive Checkout, Riskified is setting a new standard in fraud prevention—one that not only protects merchants from financial losses but also enhances the overall shopping experience for customers. As ecommerce continues to grow, solutions like Adaptive Checkout will play an essential role in ensuring that businesses can operate securely and profitably in an increasingly digital world.
