The question most merchants ask is, “How do I grow my business while managing the costs associated with fraud, and continue to strengthen customer trust and loyalty?” Facing constant threats of online fraud companies face difficult decisions where to spend their money.
Merchants are suffering the loss of $2.79 in costs for each dollar due to fraud they incur through online channels. Online fraud burdens merchants with higher fees and more replacement costs than fraud incurred through other channels. The surge in online fraud is driven by the proliferation of malware and data breaches, which facilitate the theft and misuse of consumer’s’ payment card, merchant account, and alternative payments account information.
Merchants would be wise to focus on customer identity and transaction verification, particularly for online transactions.Sadly merchants believe that some level of fraud is inevitable, but understand that their prevention efforts will result in more positive customer relationships in the long term. Mobile merchants saw an increase in fraud as a percent of revenue. As their online sites gain popularity online Fraud attempts also increase.
Fraud via identity theft often results in a lengthy resolution process which may involve charge-backs to the merchant. Smaller online merchants are particularly hard-hit by this fraud type—even when they were not responsible for the compromise of consumer data. Criminals are successfully targeting organizations that store or transmit consumers’ personally identifying information and payment data, including retailers, with 1 in 4 data breach victims suffering identity fraud.Reinforcing the perception of a secure transacting environment is critical to maintaining the patronage of consumers. This is especially true for smaller online merchants, where 50% of fraud victims admit to avoiding certain merchants as a result of being defrauded in the past and fear patronizing these businesses in the future
Malware designed to glean login credentials or launch Man-in-theBrowser (MitB) attacks are on the rise, and allows fraudsters to access information and create false transactions through merchant accounts where any type of payment data is saved. Usernames and passwords to merchant accounts and alternative payment accounts may also be gleaned through this kind of data breach.
Merchants understand that while not all fraud is preventable, wise investments in fraud mitigation can be beneficial to the bottom line.
Our Recommendations for preventing fraud through online channels include employing fraud solutions geared toward authenticating customers and their transactions across all accepted sales channels and payment methods. Placing mobile transactions under greater scrutiny against online fraudsters is in your best interest as an independent business.