Cross-Border eCommerce: 5 Best Practices for Managing Fraud
A global economy fueled by eCommerce has created a “now” mentality among today’s consumer. How big is the global e-commerce economy? According to recent stats by Business.com, China is leading the way with more than $672 billion in eCommerce transactions, followed by the United States at $340 billion and the United Kingdom with $99 billion.
A merchant’s inability to tap into new markets or cross-borders can be detrimental to growing their business. There are numerous challenges and considerations when expanding their market presence internationally. A few of the most common barriers are provided below:
- Consumer Habits. Understanding cultural differences and how consumers typically purchase within different markets is an important part of selling cross-border. It’s best to understand what normal looks like in order to determine what risky behaviors are.
- Fraud Management. A survey taken during Kount’s webinar on this topic found that the largest challenge is fraud. This is no surprise because it’s becoming increasingly difficult to keep up with fraudster tactics. Fraudsters have an arsenal of tools at their disposal to automate how they steal from merchants including bots, credential stuffing, card testing, proxies, and more.
- There are many inconsistencies with how each country manages legal and tax regulations. Some countries will treat international eCommerce retailers different then domestic which adds another layer of complexity.
- Logistics and shipping. The 3 most dominant factors that motivate abandonment of a filled shopping cart are; high shipping costs, additional fees at time of delivery (such as duties and taxes), and too lengthy shipping times. Getting this under control can be a strong competitive advantage for eCommerce retailers.
- Payment Processing. Preferred payments vary across the world. In Japan, Konbini, a local payment method accounts for 1/6 of eCommerce payments. In Germany, only 30% of payments are Visa, MC, AMEX. There are 180 currencies worldwide and 13% of online shoppers will abandon their shopping cart if the price is displayed in a foreign currency.
Kount recently hosted a webinar with special guest Sam Hartung, Risk Partnership Manager from Whitepages Pro about this topic. Specifically addressing how to manage fraud for cross-border eCommerce, Whitepages Pro and Kount identified 5 best practices:
- Real-time fraud screening technology: There are predictable patterns that correspond to the behavior of genuine customers and fraudsters. Specific technologies used to collect data to make this analysis, include multiple identity element velocities, transactional frequencies and linkage history attributes.
- Artificial intelligence and machine learning: The application of machine learning provides the analytic horsepower to analyze millions of transactions and data elements to correctly identify and mitigate fraudulent behavior with every transaction.
- Identity verification tools: Understanding who is behind the transaction allows the merchant to have more confidence. The five core data attributesassociated with identity, include email, phone, person, address, and IP.
- Experienced human intelligence: The application of domain expertise provides merchants the ability to tailor their fraud and risk solutions to their specific business, make exceptions for specific transactions and more closely align the solution to the company business goals.
- Common fraud risk signals: Listed below are a few of the positive and negative attributes that can identify and mitigate risk for cross-border eCommerce:
|Positive Risk Signals||Negative Risk Signals|
Deterring fraud from international transactions requires that merchants apply a multi-layered approach that leverages artificial intelligence, machine learning, domain expertise and a combination of technologies that provide insight into individual transactions. These technologies, when working together, can provide confidence with every transaction by providing greater insight into the data.