Solved sort of encryption

Discussion in 'Join' started by Roger.J.Borowski, Sep 27, 2018.

  1. Roger.J.Borowski

    Roger.J.Borowski New Member

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    At Best Buy, checks are welcome. (Profit From Intelligent Check Strategies)

    Best Buy has considered putting up "No Checks" signs as a way to combat the growing risk of check fraud. But, after doing the math, the consumer-electronics retailer believes there's a better way.

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    "We've thought about not accepting checks in certain high-risk locations," says Chris Steele, VP of accounting operations for Best Buy. "But if you can model a strategy in a way where you can accept checks more profitably than you can refuse checks, the decision is obvious."

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    For Best Buy, based in Eden Prairie, Minn., the obvious decision has led to a long-term relationship with Certegy Check Services, which provides the retailer with a complete outsource solution. Certegy provides check services including check warranty and collections for more than 400 Best Buy and 1,300 Musicland stores across the country.

    While the behind-the-scenes strategy can be described as sophisticated and complex, involving artificial intelligence and continually updated fraud models, Best Buy's goals are simple. The chain wants to maintain a high level of customer service. It wants to increase sales. All the while, Best Buy wants to protect itself against the modern check-fraud artist and limit check losses. Achieving those goals requires professional help, Steele says, because Best Buy's expertise lies in consumer-electronics retailing, not check authorization or check risk management.

    "Certegy is delivering a high value to us," he says. "They're removing direct management involvement from the equation so that we don't have to spend a lot of time looking at this."

    Back when Best Buy was an up-and-coming chain of 40 stores, one person was responsible for managing the retailer's back-end process of check authorization. That arrangement has changed very little as the company has grown to a $20 billion retailer, he says. "We have used Certegy's sophistication, their expertise and their modeling," he says. "They're thinking way ahead, so we can spend our time thinking about being better retailers."

    Measuring the risk associated with individual checks as they pass from the customer to the cashier of a national chain store requires an intelligent and sophisticated strategy. Gone are the days when a store manager could size up his local customers and make accurate risk-management decisions on the spot, he says. Modern technology has given thieves a boost in the form of high-quality, low-cost color printers. Fake drivers' licenses are available on a frightening number of Web sites. On top of that, thieves are getting smarter. Not surprisingly, check fraud is rising as a percentage of check sales throughout the retail industry.

    In the case of Best Buy, risk management takes on an added dimension with high-risk merchandise. Check thieves are naturally attracted to expensive electronic products that can be resold with little effort. "Selling a refrigerator carries a different risk profile than selling a laptop computer or an expensive best car speakers for bass without subwoofer ," Steele says. "It's an old challenge, and it's a difficult challenge. And crooks keep it interesting by continuing to create new challenges."

    Despite those forces, Steele says the chain's outsourcing strategy is up to the task. Best Buy is not seeing the increase in check losses that would be expected from steady fraud and reduced check volume. "Assuming the bad guys are still out there and given that the amount of business on checks is declining, one would expect the rate of check losses to increase," Steele says. "But what we've seen is a consistent and stable loss rate, which suggests Certegy's systems have enabled us to manage this business very successfully in the context of this difficult environment."

    Certegy's up-to-the-minute data and artificial-intelligence models are bolstered by its relationships with retailer loss-prevention departments. Steele describes a two-way flow of information designed to identify risky check transactions. In addition, Certegy pools information and data from throughout its client base to better monitor the retail industry.

    "They help us redefine our requirements better," Steele says. "It isn't just managing losses, it's how to improve service and find the right balance of risk and reward-fine-tuning of the model. And it isn't us dictating to them or vice versa; it's two companies collaborating to make the right business decisions."

    Best Buy doesn't want to accept bad checks, nor does it want to turn away good customers. Customer behavior shows clearly that checks are an important payment option, and many customers still prefer using them, he says. Best Buy's check strategy puts a heavy emphasis on letting them do just that. "When I first got into it, I thought it was all about negative files and turning down bad customers," Steele says. "I've learned it's much more about positive files, identifying good customers and making sales. And no one does that better than Certegy."

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    In 1987, when Best Buy first turned its check program over to the company now known as Certegy, Steele says he envisioned the service as a temporary outsourcing arrangement to be replaced eventually by the retailers own system. Today, he laughs at the idea. "I told them my goal was to use Certegy until I could replace them with our own system," he says. "I was fairly naive. Now I don't believe that we can be as good a check services company on a part-time basis as they can be on a full-time basis."

    While providing check services to Best Buy, Certegy's name changed twice--from Telecredit to Equifax, and from Equifax to Certegy. But according to Steele, the quality of the people and the service have remained at the same high level.

    He says vendors regularly approach Best Buy with the common pitch: We can help you reduce your check losses. "You know what? They probably could," Steele says. "But at a cost. Our check losses might be less, but our business would be impacted, and declining customers' checks would be part of it. Our attitude is: Let's take care of our customers, provide a high level of service and build our models around good customers."

    More and more retailers are discovering the wisdom of outsourcing their check services to experts in risk management. Certegy alone has seen the total volume of its check authorizations grow from $10 billion in 1995 to well over $60 billion in 2001.

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    Certegy Check Services provides a variety of services to a growing list of retail clients listed below. Among the industry-leading services are personal check authorization, check warranty, electronic check authorization, payroll check authorization and check collection services.

    Serving multiple retailers in multiple sectors allows Certegy to further leverage its pools of data and real-world experience, says Jeff Carbiener, Certegy Check Services' senior VP and group executive. "The better the view you can get of the entire retail environment, the better off you are at understanding all the angles of risk," he says.
     
    Last edited: Nov 15, 2018
  2. joaomgcd

    joaomgcd Administrator Staff Member

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    End-to-end encryption is a feature :) You can enable it in the app's settings. More info here.

    By the way, where on reddit did you see that, I'm curious :D
     
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