Payments Fraud has been a growing problem for many E-Commerce merchants. This problem has been exacerbated by data breaches in recent years. The Target and Home Depot breaches account for almost 100 million stolen credit and debit card details between them.
This problem will be further magnified as the EMV deadline is coming up in October 2015. When the EMV implementation is in force, it will be extremely difficult to make fraudulent purchases at brick & mortar stores. Fraudsters will always follow the path of least resistance, shifting to the online and mobile platform to hit E-Commerce merchants. Below shows a simplified process on how Payments Fraud operates:
Difficulties in controlling fraud
Many merchants are having increasing difficulty in controlling fraud. This is especially so if merchants are still using traditional fraud prevention filters such as manual approvals, setting hard purchase limits, IP blacklisting, a poorly defined risk scoring model, etc. These filters create a lot of payment friction and turn away genuine customers, reducing your conversion rate. This, in turn, also tells you that your marketing dollars are wasted. A typical fraudster today is able to circumvent these traditional fraud filters easily, so merchants find themselves in a position where they are always vulnerable to the fraudsters that they suspect, has been targeting their site for months but unable to do anything to stop them.
Common Problems with Fraud filters
Setting a limit on number of purchases or a limit on the amount purchased may help you limit your fraud losses in the short run. However, fraudsters will eventually know the set limit when they have tested enough transactions. They are able to bypass the limits by creating multiple accounts, switching IP addresses and device fingerprinting, helping them evade the fraud filters that are in place. Eventually, in the long run, the genuine customers who may wish to purchase more products from your site, are restricted to the purchase limits. When these genuine customers create new accounts to make more purchases, they will be blocked as you would have set your fraud filters to block IP addresses or billing details that are linked to more than one account originally meant to block fraudsters.
IP blacklisting can soon be considered a thing of the past. As discussed in our last section, fraudsters do not re-use the same IP address for another purchase. For every transaction, fraudsters change their IP and ensure that there is a new set of billing information ready, to evade your fraud filters.
Poorly defined risk scoring models are commonly seen in many E-Commerce merchants today. These risk scoring models are usually edited based on a reactive approach, which is, after a chargeback notification is received. On average, a merchant is only notified of the chargeback a month after the transaction date. The physical product would have been sent, digital goods would have been downloaded or sent. This means, the merchant is left with a chargeback with little idea whether they are able to recover the funds. At this time, it is already too late to adjust the risk scoring system.
Manual transaction reviews is something that many E-Commerce merchants are still performing. This process greatly hinders business growth and creates a lot of payment friction. In the E-Commerce world today, there are many substitutes to a single product, which imply that if the client faces even the slightest hiccup in the checkout process, there is a chance that the client will leave the site and switch to a competitor, losing the lifetime value of the client.
CashShield is one of the leading fraud detection solutions for online merchants looking to optimize revenue growth per chargeback risk. Employing a wide variety of techniques, CashShield is able to quickly and effectively detect, determine and filter potentially fraudulent transactions from genuine online sales.
100% Chargeback Protection is one of our flagship features that safeguards merchants from chargeback risks due to fraud that could hamper their business growth. In the case of an unauthorized chargeback due to a fraudulent transaction, which is not detected by CashShield, CashRun will cover the full costs associated with the chargeback.
Our award-winning risk algorithm with more than 200 verification and authentication tests enables CashShield to constantly track and protect merchants against the latest fraud trends. Our risk algorithm also allows CashShield to replace all your hard purchase limits with dynamic limits where each client account and transaction is uniquely assessed. The dynamic limit changes automatically as the risk algorithm learns more about each user. This significantly increases your revenue growth as there will be a notable reduction in cases of users hitting the purchase limit.
Our Global Fraud Intelligence Network allows for CashShield to dynamically update itself once there is a suspicion of fraud or confirmed fraud case that has happened on one of the merchants on our network. This allows for CashShield to be at the forefront of fraud fighting and ensures that all your transactions are protected.
Our Pricing Model removes any conflicts of interest. CashShield does not charge any setup, monthly fee or any hidden cost. Only a small percentage fee is charged for the transactions screened. This ensures that CashShield produces excellent results for merchants as our clients’ business growth aligns with ours.
Proven track record and experienced in handling even extremely high risk industries such as gaming, gambling, prepaid cards, gift cards.