When your online sales grows, your fraud protection has to learn how to adapt, otherwise it could be hindering your success. Rafael Lourenco, our EVP, discusses the importance of a fraud protection service that can keep up with online business growth:
Everyone who starts an online retail business hopes for growth and strong sales, and most new business owners take many steps to that end, such as digital marketing campaigns, working with influencers, and choosing the best shopping cart, payment processing, and shipping resources. One factor, however, is often overlooked.
Fraud protection is not only e-commerce's best safeguard against card-not-present fraud (which often targets new businesses), it's also an important part of preparing for sales growth. That's because if your company's fraud-screening process is designed for low order volume, it won't keep up when your shop catches on and your order volume rises.
Why overly simple fraud tools can lead to problems
Here's an example of how a company's fraud protection practices can get in the way of sales growth and even imperil customer relationships. Let's say a handbag company is selling premium bags online. The brand is young, and the handbag niche is crowded, so at first they're getting less than half a dozen orders a day. Because they're on a new-company budget, and because their order volume is so low, they're relying on the free fraud-screening tools offered by their payment processor and/or their e-commerce platform, plus manual review of flagged orders by an employee who's spending an hour or two per day on order verification.
This scenario can work at first, but it's not the ideal option for a small company selling premium goods. That's because when a company sells high-priced items like $300 handbags, even one fraudulent transaction can impact its cash flow, thanks to the cost of the lost merchandise, cross-border shipping costs, and chargeback fees. What's more, not all off-the-shelf fraud prevention filters are set up to handle high-value transactions; in some cases, they may flag every transaction, which can lead to a manual screening and order approval backlog. But even without CNP fraud in the startup phase, our handbag company has still placed its sales growth at risk because its fraud-screening process is not scalable, comprehensive, or continuously updated to reflect trends in fraud attack patterns.
Why scalable, comprehensive fraud-screening matters
[Read more at Website Magazine.]