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Implementing effective fraud prevention and delivering an excellent shopping experience seem to have become the new Yin and Yang of ecommerce.

Strict fraud filters can cause friction in the checkout process with multiple security and authentication steps. Tighter fraud security protocols likewise trigger an increase in false declines—legitimate CNP transactions getting declined due to suspected fraud.

On the other hand, loosening up on fraud prevention to give way to a better shopping experience with less friction can open up merchants to more undetected fraudulent transactions and increase their chargebacks.

And it’s not just the merchants who are affected. Shoppers are conflicted too.

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According to Experian’s 2018 Global Fraud and Identity Report, 66% of online shoppers like the security measures businesses are implementing because it makes them feel protected.

However, the same customers, especially the Millennial shoppers, also agree that they would transact more online if there were fewer security hurdles they need to jump over:

66%of consumers

said, “I like all the security protocols

when I interact online because

it makes me feel protected.”

42%of millenials said they

would conduct more online transactions if there weren’t so many security hurdles to

overcome...

30%among those 35 and older

India

76%

S. Africa

74%

Australia

70%

U.S.

69%

France

67%

U.K.

66%

Spain

64%

Singapore

63%

Brazil

63%

China

62%

Turkey

56%

Overall

66%

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Further, according to the Experian report: “Businesses are forever grappling with the tension between managing fraud and maintaining a positive customer experience. In most cases, the latter wins out, as evidenced by their willingness to accept higher fraud losses from authentication protocols that they concede might be deficient, but do not disrupt the user experience.”

So, what’s the path through?

Obviously, merchants are stuck between a rock and a hard place and pressed to make the difficult choice.

Door #1 leads to effective fraud prevention but unhappy customers because of strict security protocols and more false declines.

Door #2 leads to happier customers but an increased probability of fraudulent transactions and chargebacks

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What if there’s a door #3, one that leads to effective fraud prevention without hurting the customer experience?

What may have been unthinkable before is actually possible with today’s available technologies to minimize fraud and maximize customer satisfaction.

According to Next Caller’s Tim Prugar: “Defeating fraudsters and improving customer experience is not about checking boxes. There isn’t one solution to solve each respective problem. Conversely, solutions always have effects on both problems. For example, if you implement an in-depth screening authentication technique that cuts down fraud, it probably adds some friction to the customer experience. On the other hand, adding solutions that make it easier to access your account often makes it easier for fraudsters to access your account too. Luckily for consumer-facing businesses, there are solutions that don’t force this tradeoff, helping to both prevent fraud and improve customer experience.”

Here are 3 tips to help you balance strong fraud prevention and top-notch shopping experience:

Effective fraud prevention and great customer experience are not mutually exclusive

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What do we mean by “risk creators” and “risk mitigators”?

Due to their role in your company and the tactics they employ to hit their targets, there are certain departments that make you more vulnerable to fraud. For example, your marketing and sales departments in an effort to create stronger brand equity and acquire more sales (i.e. adding a coupon code field to your cart page) may implement tactics that create small cracks in your security.

In response, your fraud team may subject all coupon entries for manual review, which could, in turn, hurt the customer experience.

Ensure that these departments are collaborating to ensure nothing is being compromised.

Open the communication channels among risk creators and risk mitigators1

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2For many fraud prevention and management platforms, the default is to implement stricter rules and tighter filters. This is exactly what causes the most friction and arguably the main contributor to ruining the shopping experience during the checkout process. These strict, one-size fits all filters also cause auto-declines to spike up, which also increases the number of false declines.

Opting for platforms that combine risk management and payment processing creates a pain-free and fraud-free checkout experience for your customers. A dynamic risk management database—one that leverages millions of customer profiles, machine learning, and threat analytics from several verticals—enables you to accurately distinguish fraudulent from legitimate transactions in mere seconds.

This not only delivers a five-star shopping experience while minimizing fraud, it also increases your acceptance rate and reduces false declines. This creates an untapped revenue stream for your business.

Opt for solutions that combine dynamic risk management and payment processing

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Ideally, you should be tagging all CNP orders that you approve and decline. Then analyze the orders that you approved that were actually fraudulent and the orders you declined that were actually legitimate.

Upon reaching the point when you’ve collected enough data, you will be able to establish trends and patterns in the orders that you wrongly approved or falsely declined. You can use these trends and patterns to create “shopping stories” which you can use to dynamically adjust your fraud prevention systems. You can also use the data to create tailor-fit shopping experiences for your customers.

Truth in trends, power in patterns

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Getting the best of both worlds

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Vesta reduces false positives to grow bottom line revenues

For a long time, effective fraud prevention and great customer experience straddled the opposing poles of the ecommerce spectrum. Today, with new technologies, a change in mindset, a tweak in your processes and systems, you can prevent fraud losses and keep your customers happy — and keep them coming back for more shopping.

Vesta Corporation is the global leader of revenue-generating payment solutions for enterprise partners in the telecommunications, media, financial, and digital sectors. The company’s patented fraud protection technology is proven to increase conversion and acceptance while eliminating fraudulent transactions and merchant liability. Schedule a demo today.

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