For part two of this series, Elie Casamitjana, Product Manager, Fraud Prevention Solutions for Ogone, considers merchant attitudes and the international landscape.
Apart from consumer behaviour, merchant attitudes to the importance of fraud prevention will also vary in individual markets depending on current market size and experience of fraudulent attacks.
Read On:
Fraud and cross-boarder expansion – part I
Building a trustworthy website
8 steps to protecting your website against fraud
Research carried out by Ogone found that in certain European countries such as Germany, CNP fraud was not yet considered a major issue and merchants in these countries were less likely to consider fraud management a priority.
Online fraud is evolving at different rates in each country and needs to be monitored continually.
In each instance, taking into account business margins, strategic objectives and in-house expertise, merchants will need to find an optimal balance between minimizing both the direct and indirect costs of fraud.
As e-commerce grows, large numbers of manual checks are not an economically viable response to online fraud.
From a global perspective, there will be some variation in the tools available to merchants monitoring potential frauds.
Whereas 3-D Secure is widely used in countries like Switzerland and Belgium (over 60 percent), usage is far less frequent in Germany (below 35 percent) and France (less than 20 percent).
Despite proven result in decreasing risk, another implication is that when this authentication method is used, then it is more likely that shoppers, being unused to the practice, will abandon their shopping basket.
Besides, 3-D Secure is not available in the United States. Similarly, AVS, which is widely used in the UK, is not supported in continental Europe.
Optimised fraud prevention
Whilst it is important to prevent fraud when entering a new market, it is also essential to build customer relationships.
A strong prevention policy may lower fraud levels but if it is at the expense of slower transactions and large numbers of genuine transactions being refused then this will have an immediate impact on revenue earning opportunities, customer satisfaction levels and brand reputation.
Given the diversity of the markets studied, is there a viable universal approach to e-commerce fraud prevention? Each product, sector and country will have its own fraud challenges.
Combining software with industry and geographical knowledge can make prevention more efficient and less complex. What is needed is a refined, flexible, speedy and dynamic solution – and data is key.
Ogone’s research has found that merchants want an international solution that:
• is cost-effective, user-friendly and unobtrusive to customers
• is comprehensive – providing customer data, card and IP address checks
• provides ‘yes or no’ decisions in real time (though large merchants require further granularity)
• utilises negative and positive lists to optimise fraud management
• minimises the need for manual intervention.
In the context of cross border transactions, the solution needs to be customisable, enabling merchants to maintain control of their fraud prevention strategy at any point. Merchants wishing to expand cross-border into new markets will need to prioritise online fraud prevention whilst maximising customer service and sales revenues.
With the right fraud solution and a flexible approach to market entry, based on understanding of local preferences and behaviour, the opportunities are endless.
Click on the link to download Ogone’s free whitepaper offering a deeper look at ‘Online & mobile payments: New opportunities & threats‘.
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