Don’t wait for the holiday peak, merchants should update their fraud strategy now
E-commerce has transformed not only the way we shop, but also how retailers plan and execute their business growth and marketing strategies around the peak shopping season.
Since e-commerce fraud is on the rise, online retailers are an obvious target for cybercriminals. Just like in the world of bricks-and-mortar sales, online retailers are adapting to changes in buyer behaviour patterns, and strengthening their strategies to detect and prevent fraud attempts.
As a result, there’s already been commendable progress in the way online retailers fight fraud. According to the Australian Payment Card Fraud Report 2018, online card fraud increased from $418.1 million in 2016 to $476.3 million in 2017.
Whether its counterfeit credit details or card skimming, lost or stolen cards to goods never received; fighting fraud effectively requires time and pre-planning. Have you already revised your fraud strategy for 2020?
What to look for in a good fraud detection and prevention strategy
While the manual review of suspicious transactions will continue to play an important role in fraud protection strategy, chances are that it could cost your business more than it should.
There are several metrics you should look at when assessing your fraud prevention efforts.
Key metrics obviously include chargeback rate and prevention rate (you need to monitor how much you’re losing to chargebacks and keep false positives down as much as possible), but expenses associated with manual review is a cost often overlooked in strategy planning.
You should keep track of both the number of manual reviews you do each month and the average manual review time. Multiplied by the cost of labour, this will give you the total cost of manual review. This is a number you should be tracking just as keenly as your chargeback rate and is one of the easiest ways to reduce the total cost of fraud to your organisation.
For many online businesses, creating a team to deal with the fraud threat is essential to revenue protection. But with the scale and variety of fraud evolving, making the job of the analyst more effective should be an important part of any robust fraud prevention strategy.
Your fraud prevention software partner should therefore factor into your planning, and they should work to recommend a solution, either standalone or managed as a professional service to help ease the pressure on your internal fraud team. They should also work with your business’s team of analysts to remove the mundane tasks and provide valuable insights for their fraud management strategy.
Fraudsters are becoming more educated on fraud prevention models and fraud attempts are becoming more sophisticated. Without proper preparation, and without the right tools in place, fraudsters can more easily disguise their activity. As a result, merchants need to ensure that they take all the necessary precautions to ensure that they are ready. Having a robust fraud engine in place to help ensure customer satisfaction, minimise customer friction, reduce fraud losses and increase sales is essential.
MYOB PayBy’s specialised team of experts provides support for data analysis, rules-building, and recommended best practices customised to your business. We’re ahead of the latest attack methods and evolving fraud patterns so we can deal with the latest types of fraud before you’re even aware of them.
For an assessment of your business needs, head to myobpayby.com.