How to Reduce eCommerce Fraud Costs in 2020

2020 has introduced dynamic shifts in the eCommerce marketplace. Businesses have needed to adapt with an agile approach to new digital models. In order to remain competitive, or even remain in business, business has to deploy new approaches to meet customer demand for purchasing options such as Buy Online Pick Up in Store (BOPIS) and rapid home delivery of items traditionally sold in brick and mortar locations. The speed with which digital innovation has exploded is impressive, and yet, presents new fraud challenges that also require a fast and agile response. Teams are facing dual pressures: innovate and deliver new revenue, while minimizing damages from eCommerce fraud and chargebacks. With requests for next-day or two-day shipping up 183%, teams in all departments are feeling the strain to accelerate productivity. In short, teams are asked to increase productivity, meet new customer purchasing demand, and protect the business against the very real impacts from fraud.q Based on Kount’s data and research, there are 5 key areas where businesses can optimize costs and gain returns with less. Gain in-depth eCommerce Fraud Costs Insights in Kount’s eBook Chargeback Costs and Fees On average, the cost of chargebacks each year is approximately 0.47% of total merchant revenue. Costs from eCommerce chargebacks and friendly fraud have an immediate financial impact by lowering profits, increasing operational expenses and placing businesses into excessive dispute monitoring programs.By preventing chargebacks, business can immediately gain a financial advantage. This is possible is three ways: Increase the accuracy of the review process by using AI and Machine Learning to approve good transactions and weed out the bad ones Automate the review process by using an accurate and established fraud prevention solution Implement strategic velocity checks on order systems to prevent card testing and other malicious activity. Many businesses are hit with chargebacks when they introduce new digital purchasing models. In order to reduce these costs, there are strategies they can rely on: Implement a dispute monitoring program to deflect the potential for chargebacks by helping customers recognize disputed transactions in real time. Automate the review process by using an accurate and established fraud prevention solution Implement strategic velocity checks on order systems to prevent card testing and other malicious activity. Manual Review Costs With the rapid scale of eCommerce, manual reviews become problematic because they are costly, difficult to scale, and rely heavily on employee time. Reduce manual reviews with the right technology: Unsupervised Machine Learning Supervised Machine Learning A large data network that provides insight into customer behavior A control enter that can test and fine-tune business policies, conduct investigations, and monitor performance Software Costs Software costs can be reduced in two areas: Avoid homegrown software solutions: Internally developed solutions are often behind in the latest fraud expertise and lack the latest AI and ML technologies. They are expensive to maintain and upgrade and are typically not able to adapt quickly to changing business models. Avoid multiple software solutions: Multiple commercial software tools from different vendors that are not integrated into a single platform are costly to acquire, maintain, and support. Increase ROI with Data Analytics In-depth fraud and customer behavior data is invaluable information and may include: Device information Credit card information Geo location information Shipping and billing information Email verification The ability to correlate this data with additional information, such as past purchases, the size of the purchase, and the probability of a return, is invaluable for optimizing and targeting marketing campaigns, products, and promotions to particular segments in order to generate extremely high rates of ROI. Accelerate New eCommerce Channels Businesses recognize the need to deploy new channels swiftly and without adding customer friction. As a result, advanced capabilities are needed to meet customer demand for new eCommerce channels while protecting against digital fraud. For example, Buy Online Pick-Up in Store (BOPIS), Buy Online Return in Store (BORIS), and curb side pickup are in high demand. It’s necessary to advance into these new digital arenas without allowing fraud to reduce the income gained from these advancements.