The changing payments landscape challenges everyone to balance opportunity and risk. What does it take to effectively manage this balance and be a fraud management leader?
Changing Consumer Expectations
Consumer expectations are increasingly being set by masters of digital commerce, such as retailers offering in-store pick-up within an hour of purchase or ride companies that enable riders to hail and pay for the service directly from an app on their phone.
But it’s not just digitally native organizations that are catering to changing consumer demands and raising the bar. Traditional businesses are also getting better at delivering convenient, personalized and integrated customer experiences that cross digital and physical boundaries.
The Costs of Poor Fraud Management Practices
As they invest and immerse themselves in digital transformation, organizations have to make every sale count. Falling short of conversion due to a poor fraud management decision is not an option. The cost is not only the revenue lost from that individual sale, but potentially any further revenue from that customer, especially in the case of ongoing subscriptions where billing isn’t a one-and-done exercise.
Plus, customers who have a negative experience with a service are more likely to abandon ship, and to share their negative experience by word of mouth and on social forums where multiple existing and/or potential new customers reside.
The Three Dimensions of Customer-Centric Fraud Management
With one lost sale having the potential to affect a brand’s reputation, it’s clear that any effective fraud management strategy should be customer-centric, with the focus on ensuring that
genuine customer orders are automatically accepted.
At the same time, it’s important that a fraud management strategy doesn’t maximize revenue to the detriment of other areas.
Effective fraud management requires the careful balance of three interdependent dimensions:
– Maximize revenue. Deliver a positive experience for genuine customers and maximize the acceptance of genuine orders.
– Minimize fraud loss. Accurately detect and reject fraudulent orders to minimize fraud losses. Maximize rejection, minimize chargebacks.
– Minimize operational costs. Efficiently manage the operational costs of fraud management activities by integrating, streamlining, and automating fraud management processes.
Fraud Management Best Practices
Based on a global report, involving nearly 2,800 fraud management specialists, representing organizations across 34 countries, CyberSource examines the characteristics of those organizations that place equal importance on all three areas of the fraud
management balancing act:
When you compare those that place equal attention on all three aspects—those that appear to have mastered balance—to those that don’t, you see statistically significant differences that mark the former as leaders, including:
- Leaders have a chargeback rate 4x lower than other respondents
- Leaders are 2.5x more likely to rate ecommerce fraud management as extremely important to their organization’s business strategy
Leaders find it less of a challenge to respond to emerging fraud attacks
- Leaders have a significantly greater range of capabilities that give them the agility to respond to the dynamic landscape within which they operate
- Leaders have a greater capability to use data effectively for fraud management
- Leaders are less likely to conduct manual review and spend less in this area with a smaller percentage of their annual ecommerce fraud management budget going towards order review staff
Download the full CyberSource report to see what sets leaders apart and how you can use this insight to move towards your own fraud management best practices, 2019 Global eCommerce Fraud Management Report: Master of Balance, What It Takes to Be a Fraud Management Leader.