As Australian retailers rapidly pivot to online sales during the coronavirus crisis, staying safe from cyber criminals has never been more critical. But how do retailers balance the greater risk to their finances, while managing consumer loyalty, asks ClearSale’s Rafael Lourenco?
As the dust begins to settle on the economic earthquake of COVID-19, it remains uncertain just how many Australian SMEs and retailers will rise from the ashes.
Amid the decimation of bricks-and-mortar sales, the coronavirus pandemic has sparked an e-commerce renaissance for many retail businesses as social distancing looks set to remain the “new normal” for months ahead.
While pivoting entirely to online sales may appear simple, many merchants, especially those with small scale businesses, are being caught off guard by the security challenges running a digital business entails, and may be unaware of the money that’s seeping from the backdoor.
A springboard for scams
According to our research, “No second chances! Why the e-commerce industry needs to make anti-fraud protection a priority”, only 35 per cent of Australians shopped online in the six months before the pandemic.
With fewer brick-and-mortar stores open, consumers have shifted to e-commerce. But with every digital platform launched, small retailers open up another window of risk for their consumers’ security.
It is no secret that opportunistic cybercriminals have capitalised on COVID-19, using it to drive virus-themed online and SMS scams. Indeed, more than 95 cybercrimes have been reported relating to lost money or personal data to such frauds.
Uncertain times are gold dust for threat actors, who can use small retailers’ current anxiety as a springboard to bypass their security shortcomings and gaps. While small retailers can be forgiven for prioritising cashflow and their ultimate survival, the threat of a cyber attack should not be underestimated, especially now.
Merchants lose out not only economically but also from a brand perspective. Given the heightened sensitivities at play, small retailers hit by data breaches or cyber-attacks risk losing consumers’ trust, potentially irredeemably.
According to our research, 45 percent of Australians are put off from online shopping by the very thought of online scams, let alone finding themselves a victim of one.
At the same time, small retailers exercising caution also risk the ire of a customer when a credit card transaction is mistakenly refused in what’s known as a false decline.
A balancing act
Merchants have a difficult balancing act to play. If they choose to do nothing about fraud, in a “hope for the best” strategy, they risk endangering customers, losing their trust, and driving them away permanently.
On the flip side, taking an overly cautious approach incurs chargeback fees for false declines and loses them the value of shipped merchandise. Card issuers will also increase a retailer’s chargeback fees if they incur too many declines. Meanwhile, the customer is again left questioning the website’s legitimacy and cyber safety.
To ensure their online security is both robust, but not overzealous to make customers feel at ease, small retailers have to make sure that their anti-fraud software provider is accredited and has a proven track record of protection across markets.
Merchants can reassure customers of their legitimacy by clearly displaying security seals with anti-fraud software providers, especially during checkout and payment sections. Another tip for customers’ peace of mind is to include an experience feedback section. Displaying this publicly not only keeps you attuned to the online experience you’re providing but also reassures new customers who see the previous (and hopefully positive) reviews.
Building this sense of trust and a security safety net may cost time and effort at a time of shrinking cash flow and resources, but it is better than losing consumer trust. With all the other retailers ramping up their online presence, there’s no shortage of competition for the attention of Australia’s increasingly cash-strapped market. If in doubt, it’s always better to be safe than sorry.