Online retailers need a payment mechanism they can trust
Comments from John France, managing director of the eWise European Payments Division.
In a recent report conducted by the Centre of Economic and Business Research and PayPoint.net, the cost of eCommerce fraud to the UK economy is likely to rise by 18% between 2011 and 2015 – reaching £195.3 million.
It is clear to see why today’s retailers need to guarantee who every customer is. They want to qualify that the customer is who they say they are, and that they have the available funds to make the purchase. Exposing themselves to unnecessary risk is both costly and dangerous.
Equally, retailers want to be able to accept as many payment types as possible – they need to combine convenience with security. And the more options retailers are able to provide, then the more likely they will avoid shopping cart abandonment. Today’s customer doesn’t want to have to remember lots of information at the till – technology needs to be there for a reason; to make the process both easier and more secure (for all parties).
When a consumer pays for goods through a debit or credit card, they are – in effect – offering their bank details directly to the merchant. And, if they make the wrong decisions on who to buy through, they expose themselves to potential fraud.
Fraud, or rogue merchants give retailers a bad name. Consumers want a level of trust when it comes to making a payment, and they need to know that – in the event of fraud – they will get their money back. The onus is therefore on retailers to make sure they have signed up to a code of conduct, and that they are perceived to be in good company – or part of a wider, trusted network.
Equally, the retailer may also need to guarantee secure retention of the client’s card data – incurring further cost implications for the merchant. Today’s retailer is burdened with the issue of having to store copious amounts of card payment data; data which – in fact – is of no use to them. This requirement adds layers of cost and complication for the merchant and may not always be manageable for the smaller players.
In order to cut down on and avoid unnecessary incidents of fraud, we are seeing retailers invest large sums in software to interrogate spending patterns. Retailers want to authorise every transaction in order to sell the goods. And, they need to provide the necessary proof in the event of fraud – if not, they are likely to become liable for any money lost. In 2010, the true cost of fraud to retail merchants in the US was estimated at $139 billion. For every $100 in fraudulent transactions, merchants were deemed to pay a true cost of $310 in total losses .
Through eWise payo, an Online Banking Enabled Payment Mechanism (OBeP), the consumer initiates secure and private payments for goods and services or bills online, without having to provide personal financial information to any third parties . They are directed straight to their bank’s website where they will log in using their existing account credentials. The transaction is effectively validated from both sides – as all parties are known and trusted. And the need for fraud management software could also be eliminated – all the retailer will become liable for is delivery of the goods. In this instance, the merchant can devolve themselves of costs relating to card not present fraud, transaction costs are lowered, and sales are increased via reduced shopping cart abandonment. The only party to lose out are the fraudsters.
Merchants: there is a choice – it’s about using a mechanism to ensure a faster delivery of payment, which is also more secure and will build confidence within your customer base. Equally, it’s about looking to the opportunities of the future – through a mobile app, for example, actionable advertising on TV and poster campaigns could create myriad potential sales.
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