Why Unified Commerce Is Critical For Merchants — And Catnip For Fraudsters

The shift to digital commerce is more urgent than ever — and so are some of the potential pitfalls as fraudsters recalibrate their attacks and eye card-not-present transactions as a new way to make off with ill-gotten gains.

In an interview with Karen Webster, Carleigh Jaques, senior vice president and general manager of CyberSource, a Visa solution, said commerce is now different, especially for smaller enterprises. Time is of the essence.

Not long ago, she said, “there was this expectation that the last leg of the shopping experience was at a terminal, or at a countertop. What we are learning now is that the definition of ‘unified commerce’ is a lot more flexible.”

As she told Webster, “The last leg can be fulfilled in a whole host of ways.”

That includes options such as curbside pickup, she said, which has exploded in just the last several weeks as the pandemic spread.

She noted that merchants need to be able to fulfill orders with the inventory they have on hand, even as they keep the health of their customers and employees top of mind.

The coronavirus has spurred a huge number of smaller firms to embrace digital commerce, and yet they may need help getting there.

She said companies such as Authorize.net, the small business offering of CyberSource, have set up resource pages that can help small- and medium-sized businesses (SMBs) get online and streamline operations through, for example, digital invoicing.

Existential Points Of Pivot

“These are big relief valves for SMBs to get online quickly,” said Jaques, “and it’s an imperative at this stage, almost existential, to whether they can stay in business or not.”

That existential pivot, as it might be called, could be seen as early as January and February when Jaques said that — beginning in Asia and then beyond that region — the momentum continued to move from offline to online.

That was fine for eCommerce firms that already were transacting in bits and bytes. But there was, and continues to be, a shift for merchants with hybrid models.

And, she added, for merchants that already had an online presence, there’s been a marked volume swing.

Of these firms, she said, “they might have had a business that was 80 percent card-present transactions and 20 percent card-not-present. Right now, what we are seeing is that card-present volumes have dropped dramatically and depending on the industry, gone to zero, and there has been a massive surge in card-not-present volumes.”

The companies with offline/online models have recast their physical locations to act as fulfillment centers — a trend that she said has been notable in verticals such as retail, sporting goods and the grocery segment.

Elsewhere, she said, essential services, such as auto maintenance and repair, have retooled their online offerings to book appointments, take payment upfront and streamline operations so there are minimal touchpoints involved.

The restaurant and grocery sectors have also been transformed. Order-ahead was important before — now it is the primary means to serve customers. And the increasing pressures on various supply chains have also led to different commerce experiences in the grocery industry. Meat and egg shortages have led to rationing. Rationing has, in turn, forced merchants to address inventory management in new ways, including on a digital checkout page.

While keeping up with demand is crucial, it is equally important to present customers with preferred, contactless ordering and delivery processes, whether that is buy online, pick up in-store (BOPIS), delivery or curbside pickup. A fully integrated payment management solution can help ensure a merchant’s digital and card-present ecosystems operate together, reducing fraud risk and ultimately lowering labor and operational costs.

Gearing Up For Fraudsters

With the pivot toward online sales, toward card-not-present transactions, Jaques said, fraudsters are “gearing up to hit” merchants, especially smaller ones, across several avenues of attack.

There has been a big jump in phishing attacks, synthetic ID fraud, and card testing (in which bad actors try to determine if stolen card information can be used to make fraudulent transactions), she said.

“Card on file is where we are seeing that merchants need to be creative and aggressive around monitoring fraud,” she told Webster.

Attention must be paid to the shifts in consumer behavior as well if the payments ecosystem is to be successful in ferreting out fraud, in separating good transactions from the bad.

Consider the case that not all that long ago, one-way international flights would have been considered suspect and flagged as high-risk transactions, said Jaques. That’s no longer the case.

These and other behaviors are being exhibited by consumers for the first time — possibly in massive volumes across a number of different merchant categories.

To have a dynamic monitoring of shifting behaviors, said Jaques, “We’re really seeing a fusion approach between a rule-based capability set and AI [artificial intelligence], ML [machine learning]. And there is just tremendous value in that synergy in an environment like this.”

Asked by Webster whether merchants will change how they manage payments, Jaques said larger merchants may change the configuration of their business and card-present, face-to-face transactions.

That business, she said, “may stay more muted.” Smaller firms have been relatively slower to adopt digital capabilities, but now realize they have to make the switch.

Fortunately, she added, over the past few years the tools available to support SMBs have improved meaningfully, especially across platforms that can help these SMBs deliver streamlined experiences.

“There’s a lower cost to entry than there has been in the past,” she said.

Against that backdrop, digital invoicing can help firms better manage cash flow.

Efficient chargeback and dispute management processes, such as those offered by Verifi, a Visa solution, she said, can take operational (and time-consuming) burdens away from merchants and consumers.

“There’s a silver lining here,” she said of the inexorable rise of digital commerce, with the pandemic as a tailwind.

“Consumers have desired this seamless experience with merchants for some time,” Jaques told Webster, adding that “merchants no longer can think about this as an option — it’s required.”