Webinar Recap: How to Add Revenue with Enterprise Fraud Prevention
If you missed our webinar on July 25th, “How to Add Revenue with Enterprise Fraud Prevention,” this blog post provides a convenient recap.
- Chase Harmer, CEO, PayCertify
- Scott Conti, VP of Sales, BlueSnap
- Lance Millington, Channel Sales Director, Kount
- Ben Cornett, Partner Marketing Manager, Kount
Experts in the Payment Service Provider space discussed how payment processors, payment gateways, acquiring banks, ecommerce platforms, hosted pay (shopping cart) pages—and the merchants they serve—can enhance revenue opportunities while beating fraud.
Merchants: “I don’t have a fraud problem”
Ben Cornett, Partner Marketing Manager at Kount began the discussion by showing a humorous cartoon to highlight the state of denial that smaller and midsize online businesses tend to be in when it comes to fraud prevention:
- Denial doesn’t make fraud go away. Smaller and midsize merchants may miss the symptoms of fraud because they don’t have expertise in fraud detection and mitigation.
- Declining suspicious orders is not the answer. The easy way out for merchants who lack expertise in fraud prevention is to simply decline suspicious orders. But that leads to reduced revenue and sales.
Merchants: Bolder, Riskier Initiatives
At the same time, merchants are exposing their operations to greater risk by trying new initiatives and payment options in order to maximize revenue. Some examples include:
- 1-Click purchases. Uber, Lyft, and Amazon apps make purchases easier, but also increase risk
- New marketing/sales approaches. In their quest to accelerate customer acquisition and maximize lifetime value, online merchants are trying to do things they have never been done before. These new initiatives also open them to greater risk.
Ben then turned to the audience to ask “What is your top concern with online fraud?” By a 2 to 1 margin, the number one concern was “the financial impact of fraud” on their companies. In light of the webinar’s topic—“How to Add Revenue with Enterprise Fraud Prevention”—it’s perhaps noteworthy that “accepting more good orders or opening new markets” tied for last place in the poll when it came to top concerns with online fraud.
What are some of the future trends in electronic payments and what are some things you are doing to help merchants fight fraud?
The discussion moved on to trends in electronic payments and what Payment Service Providers like PayCertify and BlueSnap are doing to help merchants fight fraud. Chase Harmer, CEO of PayCertify, discussed how merchants look to PayCertify for help with fraud and chargeback rates and how PayCertify works to provide solutions that enable those merchants to be successful long term. Scott Conti, VP of Sales at BlueSnap, echoed Chase’s comments and expanded on them. He noted that merchants are looking for more than just payment processing, but an ecosystem that includes a range of capabilities, including subscription management, tokenization, fraud tools, and more. The more these services are integrated into a single platform, the better it is for merchants. Scott next talked about the big trends he’s seeing, which are mobile payments on mobile devices and the use of mobile wallets, such as Apple Pay, Android Pay, Visa Checkout, and MasterCard Masterpass. Scott pointed out that BlueSnap helps reduce fraud risks for mobile transactions by offering blanket protection to its merchants via Kount Central, a service that enables Blue Snap to offer portfolio-wide fraud prevention to all merchants on their platform.
Where do you see trends moving when it comes to online payments and fraud?
Scott and Chase next addressed trends in online payments and fraud. Scott noted that as a provider serving a global merchant base, they see a lot of cross-border activity. As such, they have to make sure that the payment types they accept match up with their merchants and their merchants’ customers. That means processing more than just credit cards but also other payment methods, for example, “iDEAL” in the Netherlands or “SOFORT” in Germany. Further, this ability to handle alternative payment methods has to extend beyond mobile as more and more buyers shift to mobile devices and mobile commerce.
Chase noted that with the worldwide eCommerce market estimated to reach $2.4 trillion in 2019, they’re seeing the use of social media, Big Data, online shopper’s buying behavior, Machine Learning and other innovations to help detect and stop fraud. In addition, Chase discussed the fact that mobile fraud is getting much more sophisticated. He specifically singled out imposter apps that look legitimate but actually contain malware that collect personal data, change security settings, establish remote control, etc. This makes fraud prevention even more difficult and challenging.
Lance Millington, Channel Sales Director at Kount next discussed the issues that he
and the Kount team are seeing based on their work with Payment Service Providers utilizing the Kount Central solution.
- Competitive Differentiation. Payment processing is becoming a crowded marketplace. Because of this, services and pricing are being commoditized, making it harder for Payment Service Providers to stand out in the market.
- Margin Compression. Commoditization is leading to discounting to win or retain accounts, which hurts margins. Successful Payment Service Providers are looking for ways to add value versus merely cutting fees.
- Smaller Merchants Neglect Fraud Prevention. Due to the perceived cost and complexity of anti-fraud systems, many smaller merchants neglect enterprise-level protection. It’s the last thing on their “to-do” list. In effect, these smaller merchants consider chargebacks and fraud as simply a cost of doing business in the eCommerce world.
- Comprehensive Platform for Mitigating Fraud. Until recently, fraud prevention has not been top-of-mind for merchants and Payment Service Providers, but with the EMV mandate driving increased card-not-present fraud, it’s rapidly becoming a top priority. They’re recognizing that do-it-yourself options are cumbersome and time consuming, and ad hoc tools are not enough. Payment Service Providers especially are recognizing the need for a comprehensive, integrated approach to fraud prevention.
- Integration Cost. Because merchants are wary of the cost and complexity of implementing fraud prevention solutions for themselves, they are looking to their Payment Service Providers for fraud solutions that integrate seamlessly with payment processing.
Ben next asked Chase and Scott for their reactions about a number of issues…
What are some of the best ways merchants can stop fraud attempts? Why are they turning to their payment gateways for help?
Chase answered the second question first, remarking that the new model for PayCertify is to act more like a software company offering an integrated ecosystem handling all aspects for merchants, rather than just being a processor of payments. As for the first question, he noted that there are providers who help deal with chargebacks after the fact, but he recommended stopping fraud before it starts. He described how PayCertify employs technologies like frictionless 3D Secure and Device ID to stop fraudulent transactions before they become chargebacks. He also discussed the rising incidence of friendly fraud, and how it’s necessary to have a solution that ties transactions to buyers so it’s possible to successfully resolve this growing problem.
What are the one or two big things coming to the payments space which might impact merchants the most?
Scott re-emphasized the growing importance of mobile and the rapid adoption of mobile wallets, which he portrayed as “through the roof,” as evidenced by Visa Checkout alone having 50 million shoppers globally. He pointed out that mobile wallets provide, in effect, a “1-click” checkout for consumers. This reduces payment friction by 80% and reduces fraud by 60%.
What are some strategies to help Payment Service Providers grow a merchant’s lifetime value?
Chase stressed that different merchants have different risk profiles and profit margins. Implementing a strong fraud prevention process adds value that makes merchants less likely to be lured away by discount offers from other processors. By making merchants “sticky” for the long term, you avoid losing them in 3 months and forfeiting your investment in onboarding them.
Scott concurred with Chase, and added that using an enterprise-class fraud prevention solution like Kount helps BlueSnap maximize conversions for their merchants—while eliminating the bad traffic. The combination of higher sales and lower fraud makes for happy merchants who tend to be loyal, which helps to grow their lifetime value.
To hear the full discussion, click here to watch a recording of the webinar: “How to Add Revenue with Enterprise Fraud Prevention.”