The challenges of address data in cross-border payments
There is no doubt that the entire financial industry is experiencing massive disruption right now, and globalization is the driving force behind this change. The growth of cross-border P2P, B2C and B2B transactions exposes problems built into traditional payment rails – and fraud/identity solutions. One of these areas is address data.
We sat down with Rob Heidenreich, Vice President Global Sales and Partnerships for Loqate (a GBG Group company), to discuss the challenges of global address verification in a cross-border trade.
In the payments and IDV industry, a person’s address has always played an important role in establishing identity – and will always continue to do so. Most existing payment and fraud/identity products are developed on a country-by-country basis with data exchange agreed and built between governments, banks and financial institutions. It doesn’t matter if we’re talking AVS, Payment Services Directive 2 (PSD2), Strong Customer Authentication (SCA) or 3D Secure 2 – the importance of address location data creates compelling opportunities for Loqate to offer a global location verification solution linked to the transaction.
Historically, Loqate has focused on e-commerce and the customer data/MDM area. It has over 14,000 companies using the technology and is the address verification engine that companies such as Oracle, IBM and others have built into their own products.
Removes “regional bias” from address verification
“What we’re seeing now in financial services is that identity verification is moving closer to the transaction,” says Rob Heidenreich. “Just recently, Loqate licensed to one of the big three payment networks to solve problems related to cross-border payments.”
To understand the cross-border address problem, we need to step back from our own regional bias about what an address is. Most people reading this will be in an urban area in a high GDP country and have a postal address standard that usually follows the format premises, street, city, state, zip code. This is not the case for most regions of the world. In some countries, the address may be based on neighborhood/location names, points of interest or even directions to a location. Across nearly 249 countries and territories, there are over 130 different address formats.
Loqate solves this. The reason companies choose Loqate boils down to three reasons: the data; Loqate’s AI/ML parsing engine; and its deployment architecture.
Loqate sources data from around the world and gathers hundreds of reference data sources from postal authorities, geographic information systems (GIS), energy company data and other validated sources. By overlaying multiple data sources into a consistent and reliable single-best record, it provides customers with the most complete and accurate global address reference database at the premise level.
Loqate’s machine learning algorithm works on a country-by-country basis to analyze address elements more accurately and standardize an address into the most appropriate local format – improving match rates.
Superior match rates to competitor solutions
Much of the payment industry’s technical infrastructure is very complex. This means that you not only need an API that is able to handle large scales, but also that you can accommodate different requirements. Loqate’s APIs are optimal for integration into large-scale big data infrastructures required for cross-border payments, fraud prevention and identity verification solutions. Loqate’s solutions are available as a Cloud SaaS API, or on-premises API that is elastic and horizontally scalable, making it easy to deploy in containerized Kubernetes-based environments.
Earlier this year, Loqate won a contract with one of the largest BNPL companies after a competitive bake-off against two competing solutions that the company used for address verification. The results were absolutely astonishing. In a test of millions of records in dozens of countries, Loqate averaged over 23% better match rates compared to the competition. Even in the US, where there is a strong postal standard, the confirmation rate exceeded the competing solution by over 7%.
It illustrates the power of Loqate’s data curation and AI/ML parsing engine – and that having a truly global solution is critical to meeting cross-border needs at scale. Being able to integrate one API to enable verification across 249 countries/territories/possessions, 6,500 spoken languages and 130 different address formats is essential to support the necessary scale and diversity.
About Loqate
Headquartered in the UK and with over 1,000 team members in 15 countries, Loqate works with 20,000 customers in over 70 countries. Some of the world’s best-known businesses rely on GBG to provide digital services and keep their economy moving, from US e-commerce giants to Asia’s biggest banks and European household brands.
Loqate is the leading developer of solutions for global address verification, pre-writing, geocoding, email and phone verification. Loqate curates and develops world-class global location reference data and verification technology engines, enabling partners and customers to verify, standardize and enrich data globally and at scale.
