CNP merchants dedicate over 7% of their total annual revenue to battle fraud, according to a new study from research consulting firm Javelin Strategy and Research LLC. It’s a number that all but certain to rise as online merchants face an increasing onslaught of online fraud. While these merchants continue to get sophisticated with the ways they protect their payments operations, so too do the nefarious characters lurking in the dark corners of the web.
This scenario is aggravated by U.S, EMV rollout, which has all-but-eliminated card-present fraud and shifted the vulnerability to CNP payments, where fraudsters have many more opportunities to exploit weaknesses.
Online fraud is a multi-billion dollar problem for CNP merchants and requires an increasing amount of vigilance to protect payments at every point in the transaction lifecycle. The good news is that there are a number of tools, platforms and services merchants can employ to put a stop to online fraud. The bad news is that many of these solutions overlap and merchants who don’t have a digital payments advisor to guide the process end up overpaying for too much fraud protection, hurting the customer experience and even declining legitimate transactions.
What are the real costs of overprotection?
Overprotection happens when merchants employ too many solutions or tools OR have the dial on those tools turned too high. The result is added complexity to the customer experience, cart abandonment, unnecessary manual reviews and false positives and declines. In other words, the bottom line – and brand reputation – is severely damaged.
Identifying online threats heavily relies on data – often data from many different and disparate sources. Additionally, the data must be analyzed to identify anomalies quickly and efficiently. This can be difficult with large data sets, especially large data sets coming from multiple sources where there is overlap. Even small CNP merchants generate a world of data through multi-channel marketing, sales, order processing and payments records. The complexity of data can be astounding.
The catch is that the utilization of multiple tools and data sources is necessary. The best fraud prevention systems rely on a multi-pronged approach that leverages several tools at every stage in the payments cycle: device identification, geolocation, 3D Secure, rules-based filters, biometrics, etc. The key is ensuring that fraud-scoring tools are not set to overly-sensitive levels, which can trigger false positives and result in unnecessary declines. This not only hurts the customer experience, but results in costs associated with unneeded manual reviews, lost sales and blocked accounts.
How a Digital Payments Advisor Can Help
Employing the aid of a Digital Payments Advisor can streamline processes, increase your confidence that your payments are protected and ease worries associated with overprotection and lost profits. A good Digital Payments Advisor will have long-standing relationships with a number of fraud prevention and risk mitigation solution providers. Additionally, deep experience in layering these tools enables her to guide your payments team in finding the right combination of tools for your unique needs – a combination that adequately protects payments and profits without turning good sales away or creating friction in the customer experience.
Your Digital Payments Advisor should have familiarity with your individual business model. One size does not fit all when it comes to fraud prevention and your Digital Payments Advisor can help you test and adjust tools to achieve the optimal level of protection for your business. This frees you up to focus on the core needs of your business while ensuring that your customers – and your profits – are protected.
Want more information on the benefits of a Digital Payments Advisor? Download our latest ebook, “What Every Merchant Should Know About Hiring a Digital Payments Advisor” and learn how to streamline your operations and boost your bottom line.