GoCardless fights fraud with new prevention tool

In the face of rising fraud risk, direct bank payments provider GoCardless has introduced a new fraud prevention feature, dubbed Verified Mandates, into its global payments platform.

Combining open banking and direct debit capabilities, Verified Mandates aims to prevent fraudsters from accessing goods and services from online merchants without paying.

Recent research by the company shows that 91 per cent of consumers think that businesses are responsible for protecting customers from fraud, and 81 per cent would be more likely to shop from a brand that takes fraud seriously – adding a commercial imperative for merchants to seek fraud solutions.

Recurring revenue businesses that collect payments via direct debit are particularly vulnerable to payment fraud, according to GoCardless. The firm’s research shows that 30 per cent of merchants consider it the primary threat facing their businesses.

Yet, despite this, over half of businesses still do not undertake full checks of customers' bank information prior to providing them with goods or services, according to the company.

Verified Mandates re-routes the usual checkout flow to include a step during which the customer will be prompted to login to their online banking platform to authorise the direct debit, giving the merchant instant confirmation of verification.

"We’ve created a feature which helps businesses protect their hard-earned revenue while meeting the high standards consumers now expect for any checkout process,” said Hiroki Takeuchi, co-founder and CEO at GoCardless.

“We see Verified Mandates as the latest example of the power of open banking, enabling payments that offer a better experience for everyone.”

GoCardless says the move has been well-received by its customer-base, with clients such as broadband provider, Cuckoo Broadband, eagerly awaiting the new feature as a means of growing with “added security”.

This news follows a general push by GoCardless in the open banking space, having launched its first open banking feature, Instant Bank Pay, in the UK in 2021.

The company also recently received funding of $312m in a series G funding round – bringing it to a valuation of $2.1bn – with a view to accelerating its open banking growth.