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E‐Commerce » Best Practice | 28.01.2015

How to tackle fraud in an omnichannel landscape

 

A recent Worldpay study1 reports that 79% of online merchants believe that the growth of omnichannel leaves e-commerce open to fraud - but how can e-tailers rise to this challenge and protect their businesses and their consumers?

Worldpay’s Fragmentation of Fraud report reveals that 50% of the e-commerce businesses surveyed find it ‘difficult to keep up with fraud trends’, while only 20% are ‘very confident about their ability to manage new fraud threats’.

Three factors of omnichannel growth are seen as particularly challenging in terms of fraud prevention:

  • 63% of online merchants struggle to cope with fraudulent activity targeting specific payment methods, especially as a greater range of payments, such as e-wallets and mobile transactions, becomes available.
  • 70% of e-commerce businesses find it hard to deal with different types of fraud across different markets - even though they each sell to an average of fourteen countries.
  • While retailers are consolidating their omnichannel offerings, 76% feel that using more channels makes them more vulnerable to fraud.

These key issues are exacerbated by other barriers to an effective fraud management strategy, such as a lack of dedicated omnichannel fraud prevention and a lack of time and resources.

‘On average merchants can reject up to 2.6% of transactions because of fraud’ - Retail Times2

 
How can  e-commerce businesses protect themselves against fraud?

But with e-commerce fraud estimated at £110 million in the UK alone in the first half of 20143, what steps can e-commerce businesses take to protect themselves against fraud?

  • Cybersource4 recommends using prevention software tailored to each channel your business is operating on - in its 2013 fraud report, it found that 78% of retailers with mobile sites were still relying on their standard online fraud screening tools, leaving them open to attack. The company also suggests tracking fraud by each channel, in order to build a clear picture of where your business’ vulnerabilities lie.

  • Paypers’ Web Fraud Prevention, Online Security & Digital Identity Market Guide 2014/20155  also gives some recommendations, such as using historic confidence indexing at a checkout to quickly screen a potentially fraudulent customer. The guide advises using well-known tools, such as 3D Secure authentication, which transfers any risk to the relevant bank and guarantees payment to your business.

  • Choose a highly secure e-commerce platform and use verification systems for each payment method you offer, to add an extra layer of protection for you and your customer - and check what methods of data verification are used in each market in which you operate. Businesses can also contact their local trade associations, which can offer information and guidance on dealing with fraud.

While fraud can be very challenging in an omnichannel landscape, taking some careful precautions can help protect your business and improve your customers’ experience.