The Merchant Risk Council is a global trade association for e-commerce professionals. The event took place in London and brought together industry leaders in fraud, risk and payments to explore the challenges and latest innovations in the sector. The conference saw speakers from the likes of PayU, JPMorgan Chase, Google and Santander who all took part in educational sessions and spoke about where the industry is heading. Here are our key takeaways from the event.
Not just mobile-first, but mobile-only
The mobile phone has changed human engagement and consumer expectations. We now can connect to an e-commerce site quicker than ever before and the options at our fingertips are endless. A report by Cybersource presented at the conference states that 78% of European millennials use smartphones have a ‘mobile first approach’ when it comes to technology.
However, the most unambiguous trend in e-commerce is the growth of the mobile channel. With a growing number of consumers linked to their mobile phones, it’s important that merchants and businesses have the infrastructure in place of their business model ready to gear towards excelling on mobile platforms. An increasing number of customers depend on digital serves to meet their everyday needs and it’s becoming increasingly importance to optimize mobile platforms to provide the best service for the consumer.
Fraud has developed quickly on online and mobile platforms, so it’s crucial that merchants and businesses are aware of the security measures to put in place to avoid big losses.
Global regulation must comply
Cross border commerce is growing by 26% annually, and is expected to reach $678 billion by 2018, according to research by CyberSource. Fraud is now technologically sophisticated and is becoming increasingly hard to detect.
Merchants and acquirers from different geographies are going to behave differently due to the implications of regulation in various locations. However, over the last few years there have been changes in regulation with governments working together with payments providers to allow ease and transparency of cross-border payments.
Data protection should comply despite your location. Data breaching, scams, malware seem to be everyday occurrences these days. These scams and data compromises have increased the risk for account takeover fraud, and has more than doubled recently as the losses can drastically exceed other types of fraud.
When it comes to effective fraud management in different geographies, data is key. Whether the data being captured is simple payment information, biometrics or personal information, the value is then multiplied by cross-referencing with other data in various geographies. This will ensure that businesses are aware of the potential setbacks in a cross-geographical environment.
Cross-border collaboration between issuers and merchants
As online merchants expand their international presence, managing payments acceptance can become increasingly complex. Working with a single provider can lead to expensive and inefficient transactions. Alternatively, working with multiple providers to accept payment demands to constant maintenance seems like the way to go.
Merchants require solutions that enable them to reduce their processing inefficiencies and the data there and protected to go along with each region. Fraudsters are also aware that changing business models can be slow, which opens the opportunity to take advantage.
With the digital economy changing how consumers shop and interact with businesses, consumers now expect a fast and seamless transaction period that is highly secure. Payments and fraud management are no longer back-office utilities but rather a critical source to achieve competitiveness across brands and improving customer experience.
Reducing checkout friction and false declines
In a talk between Google’s senior product manager Mark Walick, and Santander’s fraud strategy manager Joe Walters, the panellists explored the concept of false declines and why this growing trend can be more detrimental than fraud. False declines are a result of overly regulated and restricted fraud rules that decline transactions carried out by consumers, even if there is a non-fraudulent case. New research by Ethoca reveals that after conducing a pilot with merchants and issuers, 52% of the orders the merchants thought were fraud turned out to be good orders that they could have successfully fulfilled. The report also states that it’s costing both parties 1.9 billion transactions and $145bn in sales a year.
The panel discussed how businesses can distinguish between fraudulent and genuine customers, which is especially exasperated when serving global markets. This can be due to lack of experience in a new market, which then usually leads to lack of knowledge and data about local spending patterns and what constitutes and normal customer behaviour.
To combat this issue of false declines, which can even be done accidentally by family members as the panelists highlighted, can be dealt with by detecting and closely analysing spending patterns in transactions. It is also extremely important to recognise your customers' spending behaviour.
Without a problem, there’s no innovation
Numerous industry experts pointed out that without any of the pain points in fraud detection, there wouldn’t be a greater drive behind innovating to provide a better market. Businesses may not be aware of any faults in their systems and can’t fully assess whether their model and infrastructure can handle fraud and risk.
Innovation with machine learning technology can considerably improve cutting costs back with detecting fraud and implementing automation into systems. A well developed automated screening process can deliver rapid and accurate decisions about the majority of orders, leaving only the more suspicious cases for human interact to investigate manually.