E-commerce merchants are benefitting from unprecedented growth in web and mobile sales, set on a steep growth trajectory by changing customer expectations coming out of the recent pandemic. Growth and opportunity have brought along the fraudsters, with e-commerce sites being among the top targets for e-commerce fraud.
According a 2018 report, more than 90% of total website login attempts were hacker-initiated, using many tools to attempt account takeovers on consumers who have stored commerce profiles with merchants. Many new tech-forward fraud detection and prevention tools have come to market, but all add some degree of friction to the checkout process. Recent research indicates that over $20 billion is left on the table from abandoned carts and other incomplete checkout processes.
Merchants who are winning both of these battles, namely reducing e-commerce fraud and increasing checkout conversion, are moving away from blanket screening approaches to individualized audience-of-one screening processes. Beginning with an individual transaction, catalog what you know and what you don’t know about the transaction and model the probability of risk to determine what tools to apply. A targeted approach enables the merchant to introduce friction only in proportion to the benefits it delivers in fraud prevention.
Overview by Don Apgar, Director, Merchant Services Advisory Practice at Mercator Advisory Group