Today, driven by the massive growth in online retail, fraud management has had to go well beyond establishing the creditworthiness of a buyer to also encompass validating their identity. The situation becomes even more complex for e-retailers looking to do business in multiple markets.
Firstly, the international expansion brings with it higher payment processing volumes and therefore greater exposure to fraud. Secondly, market-specific regulation and enforcement are naturally more of a challenge in an international context, where governments and regulatory bodies can struggle to keep pace with fast-moving developments in data crime. Thirdly, the sophistication of fraudulent attacks increases as new technology and platforms emerge and methodologies develop.
To cope with this complex scenario, companies are adopting a number of strategies to stay ahead of the fraudsters. Pooling data assets across the company to help better identify fraud risk and behavior, for example, is used by 66% of the international e-retailers we surveyed*, while 52 percent use the device to confirm the buyer’s identity. Of the companies questioned in the survey, 92 percent were dealing with payment fraud, 78 percent with friendly/chargeback fraud and 74 percent with fraudulent account takeovers. More sophisticated techniques we also acknowledged, with 16 percent of those surveyed reporting triangulation fraud. In order to meet the emerging threat of increasingly sophisticated attacks, and bring greater automation to fraud management functions, new technologies are being adopted. Artificial Intelligence, Passive Biometrics, and Behavioral Analysis are already playing a key role in detecting and preventing fraud at online retailers. Achieving best practice in all of these fraud prevention measures can be a challenge though; a reality borne out by the fact that of the respondents that took part in our survey, more than two-thirds are partnering with their payment providers and banks to access enhanced security tools such as 3D secure and consumer authentication.
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*Our 2018 survey asked 200 senior decision-makers at major European e-commerce retailers about the challenges they face in relation to payment localization and business growth.