e-Commerce merchants hoping to achieve profit maximisation focus on two leading global trends to boost revenues: conversion and security. To meet client demand, payment service providers are investing resources into developing advanced anti-fraud technologies, as well as creating conversion strategies based on merchant specifications and requirements. International payment processor ECommPay shares insight and experience on the challenge of finding a balance.
How does conversion relate to risk management?
Merchants prioritising conversion target several key business areas, relying on their payment service providers to propose relevant tools and technologies. Payment pages, as the point-of-sale, are critical in retaining customers.
Payment pages, functioning as the point-of sale, are critical in retaining customers. ECommPay ran a series of studies to analyse customer behaviour in response to various aesthetic factors and found that certain details inspire consumer confidence, leading to increased conversion rates.
Consumers value convenience and functionality throughout the payment process. Products and services such as the recurring billing service, which authorises a merchant to withdraw funds at regular intervals for repeat services, or payment cascading and routing, which re-routes unsuccessful payments to various bank acquirers to find the acquirer best suited to carry out the transaction, result in increased conversion rates and improved customer satisfaction.
In prioritising conversion, merchants must streamline the payment process. Simplifying payments, however, has the unintended consequence of becoming more sensitive to incoming fraudulent transactions. To counteract the risks these products carry, ECommPay recommends complying with international data protection standards and engaging strict anti-fraud measures.
How does it affect security and what are the biggest risks?
There is a direct correlation between the implementation of products targeting conversion and fraud levels. By implementing technologies aimed at customer convenience, the merchant inadvertently exposes himself to risks of fraudulent transactions.
In addition to losing credibility, fraud can also cause a business to suffer heavy financial losses. Merchants are not only liable for all non 3-D Secure transactions, but international payment systems VISA and MasterCard charge additional fines for fraudulent activity.
If a payment is protected by 3-D Secure, however, a liability shift, or a transfer of responsibility, occurs. Instead of the merchant suffering the financial losses associated with fraud, the bank issuing the payment card carries responsibility.
Though it can be tempting to remove the 3-D Secure functionality in favour of increased conversion, merchants should be aware that doing so also increases the risk of chargebacks. Chargebacks not only result in financial losses, but furthermore put merchants at risk of sanctions on behalf of card networks.
3D Secure should only be removed from a payment portfolio when a merchant is aware of the dangers, but feels that the advantages of doing so outweigh the negatives. For clients willing to take the risk, ECommPay customises its proprietary anti-fraud system FraudStop to carefully monitor transactions and take action against fraudulent activity.
Is there a golden line between conversion and security? How can merchants from the iGaming industry overcome the risks and still improve their conversion rates?
Before partnering with a new client, payment service providers must carefully analyse the merchant industry and business specifications to assess the levels of risk. ECommPay works with prospective clients to develop a comprehensive anti-fraud strategy, encompassing geographical location of operations, transaction history, existing precedents of fraud management, user account restrictions, and more.
The client’s customer base is thoroughly investigated to create specialised groups, which are determined based on a number of filters, including location and historical account activity. In addition to the standard black and white lists, ECommPay offers merchants the ability to assign these predetermined groups a certain level of protection.
For new customers, strong anti-fraud settings are recommended, whereas for trusted users, merchants can offer a quicker, more streamlined payment process. FraudStop is customised to recognise the merchant-assigned specialised groups and treat the users according to their risk levels.
To successfully navigate the security tools available, payment service providers employ dedicated fraud managers. Working with clients to tailor payment technologies to their business and industry, as well as helping negate potential risks before they arise, qualified fraud specialists are able to consult merchant clients on finding the unique balance between targeted conversion technologies and sophisticated anti-fraud security measures. Fraud consultants are also able to review the existing KYC (Know Your Customer) policy and suggest areas for improvement.
Merchants know their industry and their clientele best, meaning that the final decision regarding their payment portfolio and security features always remains in their hands.
As a wide array of innovative payment technologies targeting either increased conversion, creating new means of faster, more streamlined services, or improved security, ensuring a high level of defence against potential threats, enter the ecommerce market, merchants struggle to find a synergy between the two.
With the assistance of an experienced payment service provider applying an individual approach to each merchant’s business, industry, and audience, the desired outcome is within reach. Keeping in mind the interplay between the two payment trends and their subsequent effects on one another, merchant business strategies must address conversion and security as a whole.
Marija Solovjova, Head of Fraud/Chargebacks Monitoring Division, ECommPay