Understand and Fight eCommerce Fraud.
While the ongoing shopping season presents merchants with great sales opportunities, it also raises the risk of eCommerce fraud when merchants accept electronic payments. The risk is graver since the Europay Mastercard Visa (EMV) liability shift, which has inflicted more fraud losses on merchants. Additionally, a Vesta and Javelin Strategy & Research report cites an increase in fraud management costs. This is why if you’re looking for eCommerce solutions for your business you choose one with the best safety for not just your customer, but you too, have a look at this eCommerce platform comparison.
The hardest hit are retailers that sell digital goods. The prime reason being the short time span between payment and delivery, the ease of reselling digital goods on the Internet, and the difficulty of verifying legitimate purchasers in the Internet world.
There is a spurt in the number of eCommerce fraud cases for digital goods merchants, and chargeback losses account for 23% of operational budgets, with 49% of such losses originating online. Statistics reveal that online fraud is three times higher than in-person fraud.
Related: How to Reduce eCommerce Fraud Risk.
Not only this, there is a spurt in missed sales opportunities, with wrongly declined legitimate transactions accounting for 25-34%. Such false positives cause irreparable damage to the brand reputation, loyalty, and customer experience. Merchants suffer significant losses, with 3% of sales revenue being lost to false positives.
eCommerce fraud will only rise as more and more fraudsters see online channels as a lucrative opportunity to make money through fraudulent activity. This has triggered apprehensions among online merchants, especially those selling digital goods, with 53% planning to raise fraud management budget. But their troubles do not end here. Rather, revenue generation becomes even more challenging, as they find it difficult to invest in other parts of business.
Effective fraud detection and prevention measures make online purchase little more difficult for consumers. However, online retailers must explore different means to keep a balance between customer convenience and security. Hiring an internal security team dedicated to fraud mitigation is a good investment, though it comes at a high cost. Alternatively it is essential that merchants continually upgrade training procedures and make technology investments to brace up for new and evolving fraudulent activities, connect customer data with payment risk and effectively manage fraud. To combat fraud, the law must be followed and the right security measures must be put in place, hidden cameras can be around to stop fraudulent activity existing on your business grounds which is crucial to have an ethical business.
Advanced understanding of the technology solution landscape is required to identify what meets your business security needs. Apart from this, timely integration, upgrade, and management are a prerequisite to securing your online transactions and fighting eCommerce fraud.
Outsourcing the task of fraud management to third-party specialists is a viable alternative for merchants when the cost of technology investment is considered along with the heightened risk of eCommerce fraud. Third-party service providers keep constant with technological advancements in the security industry, and thus outsourcing reduces the cost fluctuations related to fraud management.
With the inception of EMV, the risk of fraud will reduce at the point of sale. As a result, fraudsters would be eyeing more opportunities to indulge in criminal activity online, raising the risk of eCommerce fraud. Merchants need to be braced up to detect and mitigate the threat. This would require them to navigate a complex web of solutions that do not affect customer experience or sacrifice profitability merely for the sake of security.
The end goal is to free up merchants from the stress of dealing with fraud, so they can focus on key market strategies and strengthening relationship with customers.
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