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CHARACTERISTICS OF A SUCCESSFUL PAYMENT METHOD: SECURITY
Increased Fraud Risk -> Increased Security As discussed in the previous section, ecommerce has become more susceptible to fraud given the ability for a fraudster to hide behind a computer instead of the pressure of defrauding a merchant in person. This has increased the need for merchants to be more cautious when accepting transactions online and to ensure security checks are in place to prevent fraud when possible. Increased Accessibility -> Increased Leniency However, creating too many hoops to jump through can prevent legitimate transactions from being approved or result in an inconvenient customer experience. Consumer demand is more elastic online. The possibility of losing an in-store transaction because of an inconvenient checkout experience is relatively low considering the time it would take a consumer to find and travel to a similar store with a similar product in stock. Ecommerce merchants have the opportunity to reach consumers far and wide, which also means the alternatives are endless and easy to access, making the potential for customer cart abandonment a key consideration for merchants. Online merchants are clearly at a crossroads when it comes to approving transactions. Optimizing acceptance becomes the goal and the path isn’t necessarily clear, but rather a balancing act between reducing both fraud and false declines. Merchants may take various routes to find the one that works for them; however, online-only merchants seem to be more focused on revenue compared to merchants operating both online and in-store who may prioritize cost reduction. Online-only merchants have the additional challenge of ensuring legitimate customers are able to easily checkout when there isn’t someone readily available to help them with their paying experience if an error occurs.
“Fraud follows the path of least resistance, which today is online. I also think phenomena like friendly fraud are harder for consumers to rationalize in an in-store environment, where you are purchasing from an individual (represented by the cashier) versus an online platform.”
CJ BROWN | DIRECTOR OF CONSULTING, ECOMMERCE & DIGITAL SOLUTIONS, CMSPI
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