Data sharing, the practice by which companies contribute and connect to a pool of shared data for mutual benefit, is the next step in the evolution of customer-not-present fraud management. It has been in existence for a number of years, and its application can be seen among insurance companies, which have for a long time shared claims information, and financial institutions, which share information on customer credit history.
As a fraud-management tool, data sharing enables companies to share data on customer experiences to evaluate fraud risk based on the collective experience, with the end goal of eliminating unwanted customer activity. All of the information contributed by participating companies is stored securely in a shared data pool. Individual companies request and receive fraud-risk assessments for specific transactions from the shared data pool. The process empowers the merchant and ultimately drives a better, more informed decision.