Click here to download your free copy of Retail Decisions’ latest whitepaper.
Thieves follow the money and there is a lot of it to be found in e-commerce. With consumers more comfortable than ever shopping online, e-retail sales are again enjoying exceptional growth. Worldwide e-retail sales are projected to grow at an annual rate of 19.4% and hit $963 billion in annual dollar volume by 2013 states a report by investment bank Goldman Sachs entitled “Nothing But Net: 2011 Internet Investment Guide.”
Given the explosive growth in online sales it’s no wonder criminals are attempting more fraudulent transactions online than ever. Card not present fraud now accounts for more than 50% of all fraudulent transactions and that percentage is growing annually.
What’s more retailers are inadvertently opening the door to fraud wider by offering services that provide consumers instant gratification. Buying an item online and pick-up in-store programs promise fulfillment within 30 minutes or less.
The shortening window between when the order is placed and fulfillment is creating an immense need for retailers to screen transactions for fraud in real-time, rather than in batch at the end of the business day. Batch screening was only practical when items were shipped two business days or more after an order was placed. Recognizing this potential hole in the system, criminals are launching more attacks against retailers that offer shorter windows between processing an order and fulfillment so they can perpetrate fraud before the transaction is screened.
“Retailers are increasingly competing on logistics and that requires real-time, all the time fraud screening,” says Carl Clump, CEO of Retail Decisions Ltd., a world leader in card fraud prevention and payment processing. “Without real-time, all-the-time fraud screening merchants are more vulnerable to fraud, especially for transactions that cannot be thoroughly screened before the item is picked-up or shipped.”
What’s more, criminals are attempting to take advantage of retailers that expand their online business globally. Entry into a new country poses many issues for retailers and fraud risk ranks high on the list. Doing business cross-border means accepting new payment options, many of which are local and each of which comes with its own risk sets. Further, consumer behavior varies by country. Behavior that may indicate fraud in one country may be perfectly legitimate in another.
Navigating these issues requires a fraud detection partner capable of measuring the risk for all payment preferences, from alternative payment options to general purpose credit cards. It also needs to be able to distinguish between legitimate and suspect consumer behavior patterns country-by-country, city-by-city and even neighborhood-by-neighborhood. With fraud rings’ growing sophistication at hiding their tracks, this in-depth level of screening must take place in real-time to ensure that no transaction slips through the cracks.
“There can’t be a generic, global template to fraud detection,” says Clump. “Fraud detection strategies have to be customized to each market, continually adjusted to keep pace with evolving fraud trends and enacted in real-time. It requires a lot of resources and for many retailers the best solution is to partner with a fraud detection specialist that can provide the global perspective needed to detect fraud, prevent legitimate transactions from being rejected and can adjust its strategy globally as new fraud trends emerge in one part of the world before they spread to another.”
Click here to download your free copy of Retail Decisions’ latest whitepaper.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More