Stripe Teams With Spade on Data Tool for Issuers

Stripe Inc. announced late Wednesday it is partnering with Spade, a provider of real-time merchant intelligence for card issuers, to provide issuers on the Stripe platform with data to verify a merchant’s identity during the authorization process.

Spade provides information such as merchant name, category, and geolocation within 50 milliseconds. Issuers can use that data to improve authorization rates, reduce chargebacks, prevent fraud, and gain insights into cardholder spending patterns.

Issuers using the Stripe platform can access Spade’s merchant data directly through the Stripe Issuing application programming interface.

Stripe, which has more than 200 million cards issued via its platform, says it partnered with Spade because of the accuracy of Spade’s information. Stripe evaluated and tested dozens of merchant data providers before selecting Spade, the company adds.

“A card issuer can only be as good as the data they have access to,” Spade chief executive and cofounder Oban MacTavish says by email.

Giving issuers access to accurate merchant data in real time allows issuers “to make more informed decisions when approving a transaction or denying one to fight fraud more proactively,” MacTavish adds.

Card issuers have about two seconds to approve or decline a transaction, according to Spade. “Delivering enriched data quickly is critical for it to be actually used for authorization decisions,” says MacTavish.

In addition, to helping issuers make better authorization decisions, Spade’s data can be used on cardholder statements to clarify each transaction and show cardholders at which merchant they made the purchase, thereby eliminating confusion around a transaction that leads to disputes and chargebacks. So-called friendly fraud ranges between 25% to 44% of transactions, according to Spade.

“[Every cardholder] has had the experience of looking at their card statement and not recognizing a transaction,” MacTavish says. “Most consumers would be surprised to learn that their financial institution doesn’t always have much more information than is shown” on their statements.

“Not only is the end-customer experience impacted by this, but card issuers decide whether to approve or decline a transaction without the full picture of the players involved,” MacTavish adds. 

Issuers can also use Spade’s merchant data to operate rewards programs more efficiently or implement spending controls. “Stripe Issuing customers, like many other issuers out there, have identified that enriched merchant data is critical to deliver key priorities on their innovation roadmaps and will heavily rely on the ability to access real-time rich and accurate merchant data, says MacTavish.

Both companies say they will continue to explore new use cases for merchant data to help card issuers deliver “exceptional” customer experiences.

“It’s clear to both us and our customers and partners that building the future of finance requires better merchant data,” MacTavish says.