The challenges of address data in cross-border payments

There is no doubt that the entire financial services industry is experiencing massive disruption right now, and globalisation is the driving force behind that change. The growth in cross-border P2P, B2C and B2B transactions is exposing issues built into traditional payment rails – and fraud/identity solutions. One of those 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 around global address verification in a cross-border commerce. 

In the payments and IDV industry, a person’s address has always played an important role in establishing identity – and always will continue to. Most existing payment and fraud/identity products are developed on a country-by-country basis with data exchanges 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 is creating compelling opportunities for Loqate to provide a solution for global location verification related to transaction.

Historically, Loqate has had a focus on the ecommerce and customer data/MDM space. It has over 14,000 companies using its technology, and is the address verification engine that companies like Oracle, IBM and others have embedded into their own products. 

“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 resolve address issues related to cross-border payments.”

Removing 'regional bias' from address verification

To understand the cross-border address problem, we need to step back from our own regional bias of what an address is. Most people reading this will be in an urban area within a high-GDP country and have a postal address standard typically following the format of premise, street, city, state, post-code. This is not the cases for most regions of the world. In some countries, address can be based on neighbourhood/locality names, points of interest, or even directions to a location. Across the nearly 249 countries and territories, there are over 130 different address formats.  

Loqate solves for 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 globe aggregating hundreds of reference data sources from postal authorities, geographic information system (GIS), utility company data and other validated sources. By layering multiple data sources on top of each other into a consistent and reliable single-best-record, it provides clients with the most complete and accurate global premise-level address reference database. 

Loqate's machine learning algorithm works on a country-by-country basis to more accurately parse address elements and standardise an address to the most appropriate local format – and improves match rates.

Superior match rates to competitor solutions

Much of the payment industry’s technical infrastructure is highly complex. This means that not only do you need an API capable of handling massive scale, but can also cater to different requirements. Loqate’s APIs are optimal for integrating 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 easily deployable in containerised Kubernetes-based environments. 

Earlier in the 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 was on average over 23% better at match rates versus the competitor. Even in the US, where there is a strong postal standard, its verification rates outperformed the competing solution by over 7%. 

It illustrates the strength 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 critical to supporting required scale and diversity.

About Loqate

Headquartered in the UK and with over 1,000 team members across 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 the economy moving, from US ecommerce giants to Asia's biggest banks and European household brands.

Loqate is the leading developer of global address verification, address type-ahead, geocoding, email and phone verification solutions. Loqate curates and develops premium global location reference data and verification technology engines, enabling its partners and customers to verify, standardise and enrich data globally and at scale.