The Balancing Act: User Experience vs. Risk
Online commerce for digital products can be a constant tug-of-war between converting orders (higher sales) and stopping fraud (reduced losses).
Part of this is simply the nature of online commerce. Today’s mobile, global shoppers expect round-the-clock access and purchasing—no matter where, no matter when.
Another part of this is the nature of digital goods. There is the expectation by the customer of immediate fulfillment. They want to download that video, purchase those e-tickets, read that eBook, browse the online article, activate their new app, or play the latest massively multiplayer online game RIGHT NOW!
Unfortunately, fraudsters know this and try to exploit this highly-condensed approve/decline window to improve their chances of escaping detection. Whether it’s lone wolf fraudsters or professional gangs, they know that sellers of digital products often have a greater tendency to approve orders.
Criminals also know digital goods merchants try to make transactions as fast and frictionless as possible. And that means less time to detect fraud. In fact, there is all sorts of data that make it clear online businesses need to approve orders more and more rapidly:
- A page delay of just 1 second could potentially lose $2.5 million a year for an eCommerce site with $100,000 in daily sales.
- A 2-second delay in load time results in abandonment rates as high as 87%.
- Conversely, every 100-millisecond improvement can result in a 1% increase in revenue.
How can you approve orders for digital goods more quickly, without exposing your operations to steep fraud losses or excessive false positives (legitimate orders that only look suspicious and are wrongly declined)?
- Multiple, advanced screening technologies that create more barriers for fraudsters.
- Multi-stage checks that deter fraudsters without impacting legitimate users.
- Chargeback alerts that provide electronic warnings as soon as TC-40 claims are filed.
- Account registration that provides more data for fraud screening and frustrates fraudsters.
- Biometrics that help screen out bots and other automated fraud tools.
- Two-factor authentication that provides a strong, final line of defense against criminals.
- Advanced AI and Machine Learning technology that help improve results in low-information scenarios, such as first-time fraud.
Of course, trying to develop and maintain these capabilities in-house is costly and difficult. And even if you use an enterprise-class antifraud solution, you still need to make sure you’re getting superior performance to maximize sales and prevent abandoned transactions.
- Sub-second processing by fraud prevention solution is critical for fast and frictionless digital goods commerce.
- No planned or unplanned downtime: digital goods merchants must fulfill 24/7/365 and simply can’t afford a fraud solution outage.
Discover all the ways you can improve user experience while still effectively fighting fraud. Download the eBook “Fraud in a Digital World” and get insights and strategies for beating fraud, reducing mitigation costs, and increasing sales in the digital goods world.