The boost in online sales during COVID has come with a dark underside. Both friendly and deliberate fraud has risen during the lockdown, leading to lost revenue and higher chargebacks. Walking the tightrope between managing risk and conversion optimisation is now a major headache for online retailers.
While there are many new tools to help retailers reduce risk, these can slow payment processes and create roadblocks that turn customers off or leave them locked out altogether.
Modern digital-first consumers want faster checkouts and a seamless experience. And they are prepared to ditch their baskets if things get too complicated at the checkout. They like it super-easy but they want it safe too.
And here’s the retailer’s dilemma
If your appetite for risk is too low, over-zealous checks could increase checkout friction and turn buyers into runners that head for your nearest competitor. Even worse, you could lose legitimate customers that you have worked hard to acquire through false declines.
On the other hand, if your risk appetite is too high and your fraud protection thresholds and rules engines are set too low, your website can become a target for criminals and friendly fraudsters. Resulting in more chargebacks and a bad reputation with issuers who can impose fines and other compliance-related restrictions.
Getting the best of both worlds
To drive high levels of conversion, retailers must make the buying experience faster, more seamless, and with fewer friction points for the user, especially as more and more browse and buy from their mobile phones, social sites, or shopping apps.
At the same time, merchants must demonstrate to issuers and others in the payment ecosystem that they know their customers and that they’re competent at flagging and stopping payment fraud.
The right payment acquirer/processor can help retailers strike the best balance between conversion and risk. They can help establish and maintain the best chargeback/decline and sales ratios for your business. By setting the right KPIs and rules, they can also help identify fraud and authenticate genuine sales behind the scenes.
Five ways a great acquirer/processor can minimise risk without compromising conversion:
- Customized risk strategies
Ensure optimum protection and conversion ratios by adjusting risk management strategies based on your transaction and fraud history.
- Automated monitoring
Configure filters, automatic alerts, and rules based on your acceptable risk/sales ratio to keep fraudulent transactions at a level that’s acceptable but which doesn’t lock out customers.
- Auto-refund (tool created in house by TrustPay)
This proactively and automatically refunds transactions that have been confirmed as fraud by the card scheme. It removes the time, resources, and costs required to process refunds. Using TrustPay’s auto-refund tool, one merchant was able to reduce chargeback rates by 31% to achieve a €60,000 fee-saving.
- Zero fraud chargeback on 3-D secure transactions
Some payment acquirers like TrustPay not only help you filter out fraudsters from genuine customers but will also assume 100% liability for all fraud-related chargebacks that are verified with 3-D Secure.
- Manual fraud monitoring
The best providers have their own experienced risk management teams that constantly analyse retailers’ transaction flows via proprietary AI-powered tools to minimise false declines.
- Authentication and Verification tools
Provide and optimise additional tools to keep you safe and compliant, including 3D Secure authentication, card authorisation, address verification, and zero-sum account verification for recurring or card-on-file payments.