E-commerce provides merchants with one major benefit: cost reduction. The lack of a physical storefront allows merchants to save on costs such as rent, labor and maintenance fees. Also, e-commerce helps business weather economic downturns with easy expansion into healthier markets.
However, the reality is that online businesses must face the constant menace of online fraud. E-commerce fraud, and especially the fight against it, could cost a business heavily. Therefore, it is vital to have a reliable fraud solution that is effective at fighting fraud. At the same time, it is crucial to keep the costs of fraud protection low. To do so, merchants must understand the true cost of fraud verification.
Fraud verification and its unseen costs
Fraud detection solutions provide a wide variety of highly specialized fraud detection tools on the market. However, a huge lack of available information makes it tough for merchants to choose a suitable solution. As a result, they risk getting stuck with an ineffective solution too costly to exit from. To avoid this, merchants must be aware of the different costs involved in the fraud verification process. The right solution should help to focus on the business’s core competencies, not add on a source of concern.
The following chart illustrates the true cost of verification. A typical merchant implements a fraud solution, and ends up losing more than he initially did from chargeback losses:
From the chart, we can see the unseen and often overlooked costs that come with a fraud verification process. These costs include: insulted customer losses, rejected customer losses and unsatisfied customer losses, as well as the technology and staffing costs stemming from the maintenance of the solution. What worse, these hidden costs also cause negative referrals and unconverted sales. As a result, the merchant loses three times more than the chargeback cost he meant to avoid.
It is thus important to be aware of these costs and choose a solution that is capable of keeping them under control. This maximizes business growth, especially in difficult times.
How can merchants control all fraud verification related costs?
Most fraud tools on the market are designed to combat a specific fraudulent practice, and are ineffective when used alone. Merchants thus have to combine as many verification tools as possible, which runs up the bill. A more cost-efficient approach to fight fraud is to seek a comprehensive fraud management solution instead.
CashShield is an innovative and comprehensive one-stop risk management solution which provides real-time, automated verification with a unique 100% Chargeback Protection. Our risk scores and decisions are based on a risk management algorithm specifically designed to assess each of the variables received to obtain a complete and clear picture of the risk of fraud involved in every order. Thanks to its comprehensive automated tests, CashShield minimizes the rate of rejected customers and helps merchants capitalize on legitimate customers.
Most importantly, CashShield provides the merchant with real-time decisions, streamlining operations to alleviate operational costs and includes zero hidden costs such as set-up fees, training fees or product upgrade fees. With CashShield, you can expect higher revenue growth through effective fraud risk management, while keeping verification-related costs controlled.