How can WePay balance the need for robust fraud prevention measures with providing a frictionless onboarding experience for new merchants?

Introduction

Balancing robust fraud prevention with a frictionless onboarding experience for new merchants is a critical challenge for WePay. This trade-off directly impacts our ability to grow our merchant base while protecting our platform and users from fraudulent activities. I'll analyze this problem through multiple lenses, considering the business impact, user experience, technical feasibility, and long-term strategic implications.

Step 1

Clarifying Questions (3 minutes)

• Based on recent market trends, I'm thinking fraud prevention might be a top priority due to increasing online transaction volumes. Could you share how significant fraud-related losses have been for WePay recently?

Why it matters: Helps quantify the urgency of improving fraud prevention Expected answer: Moderate to high losses, increasing trend Impact on approach: Would influence the balance towards stricter measures if losses are high

• Considering our growth targets, I assume new merchant acquisition is crucial. What's our current merchant onboarding conversion rate, and how does it compare to industry benchmarks?

Why it matters: Establishes a baseline for measuring onboarding friction Expected answer: Below industry average, room for improvement Impact on approach: Would prioritize streamlining onboarding if significantly below benchmarks

• From a technical standpoint, I'm curious about our current fraud detection capabilities. Are we primarily using rule-based systems, machine learning models, or a combination?

Why it matters: Informs potential technical solutions and their feasibility Expected answer: Hybrid approach with room for improvement in ML capabilities Impact on approach: Would explore advanced ML solutions if current system is primarily rule-based

• Regarding resources, do we have a dedicated fraud prevention team, or is this handled by a broader risk management group?

Why it matters: Indicates available expertise and capacity for implementing changes Expected answer: Small dedicated team with support from larger risk management group Impact on approach: Would influence the complexity and timeline of proposed solutions

• Considering market dynamics, are there any upcoming regulatory changes or industry initiatives related to fraud prevention that we need to account for?

Why it matters: Ensures compliance and future-proofing of our approach Expected answer: Potential new regulations in certain markets Impact on approach: Would incorporate flexibility to adapt to regulatory changes