How Digital Fraud Loss Impacts QSRs 2 Minutes on Fraud: Episode 20
Episode 20 “How Digital Fraud Loss Impacts QSRs”
Restaurant brands, including Quick Service Restaurants (QSRs) are taking a traditional brick and mortar customer experience and undergoing a digital transformation by offering online ordering. Which customers love. Unfortunately, so do criminals. Whether it is cyber criminals or ordinary buyers, both find ways to exploit weaknesses in your digital customer journey. And while issuing banks take the loss for fraud in card-present transactions, the liability shifts to the merchant when fraud occurs in card-not-present (CNP) transactions.
Rich Stuppy: The thing that I think is unique is about the quick service restaurant industry right now, is they're really undergoing a digital transformation, where they're taking a traditional very brick and mortar customer experience and converting that to a digital customer experience.
By doing that they're doing apps, and web based, and a whole variety of different technologies. With each of those technologies, every interaction, in that digital customer journey is a place for fraudsters to commit fraud, create brand damage, or sow the seeds for future fraud risk, and loss. It's important to look at the journey, and employ the appropriate amount of data collection, and protection in that journey.
Tricia Phillips: What I think is surprising is that these are large enterprise organizations. They're not new to payments. They're not new to customer experience. They're really focused on their brand. But card not present transactions are a whole different animal. If you place a large order at a pizza restaurant, and you pay for it in person using your chip card. If you call your bank two weeks later and say, "I didn't place that order, I'm disputing that charge." Your bank is the one that takes that loss, because that was a card present transaction.
The difference is if you make a purchase through your app, or on the web, and you call and I say, "I didn't make that $50 purchase." The merchant is the one that takes that loss. The fraud losses can be staggering in some cases. I talked to a significantly large quick service restaurant when they were preparing to launch. I asked what their plan was with fraud, and they said, "We have a secure app. We don't have to worry about that." Because they had no idea what fraud was.
That was really early on the journey. Again a very mature organization, but very immature when it comes to risk management in the fraud space.
Rich Stuppy: You see thought leaders in this space really adopting, and learning the lessons that, for example an eCommerce company would have learned over the course of the last 15, or 20 years. They are learning those lessons about fraud risk, and loss literally in weeks, or months. Frankly sometimes those lesson are painfully early on. By working with us, and leveraging our years of experience in preventing fraud in all sorts of digital spaces. We can very quickly turn a client that might be lagging, to really a thought leader in the industry.