Many merchants look for a fraud management solution with a few main goals: reducing the number of fraudulent orders (reducing chargeback rates), reducing the time spent on manual reviews, and raising acceptance rates (boosting sales). However, only a few merchants realize that a truly effective solution should also contribute to improving user experience. This is especially important to secure subsequent sales of genuine customers, increase positive brand reputation and maximize customer retention.
In our previous article, we analyzed the hidden and often overlooked costs of the fraud detection process which could contribute directly to the final losses a merchant could face with an inefficient solution.
Gaining a competitive advantage with effective fraud management
A truly effective fraud detection solution would not only boost sales and reduce chargebacks, it would also benefit your business and customers in other ways. With a more competent solution, merchants could build an advantage over their competitors. Other than paying attention to the hidden and often overlooked costs of the fraud detection process, be sure to look out for the following when choosing your solution:
1. Syndicated fraudsters stop targeting your website
Current fraud trends point towards the rise of coordinated fraud attacks, whereby fraudsters carefully plan and launch an attack on a website through a loophole they have discovered in the fraud verification system. They will then continue to hit the same website until the loophole is closed.
Since most chargebacks are a result of coordinated fraud attacks, having an effective solution will allow you to detect the fraudster’s attempts and eliminate potential loopholes in time. Once the fraudster realizes he is unable to exploit your website, he will move on to other sites. These are often your competitors’ websites- allowing you to gain an edge over them.
2. Get favorable partnerships with payment industry stakeholders
Fraud is an unavoidable aspect of online business. However, the ability to manage your risk of fraud makes the difference between a booming business and a closing one. Controlling the risk of fraud by choosing the correct fraud management strengthens your business and opens doors to more partnerships. This includes payment gateways which are willing to extend their services to professional, low-risk e-businesses.
Furthermore, effective fraud management can increase your power of negotiation with payment providers and card acquirers. This is even for digital goods merchants, who may avoid getting labelled as high-risk and thereafter gain partnerships.
3. Improve your brand reputation
It is no secret that with today’s hyper-connectivity and widespread use of social media, word travels faster than ever before. With an effective fraud solution that provides a seamless user experience, you can differentiate your business from your competitors’ by keeping your customers happy. These happy customers could spread positive feedback to their networks quickly on social media. On the flip side, bad reviews from genuine users could also hurt your business just as easily.
4. Focus on your core competencies
Most importantly of all, an effective fraud detection solution should take your worries of fraud away. A great solution would increase operational efficiency for your team and allow your review team to focus on more growth-focused tasks such as customer service, instead of manually checking every transaction that enters the system. In addition, with greater cost savings, you can divert your resources to key business areas for greater revenue growth.
The hard truth about managing fraud
Fraud is an unavoidable part of your online business which cannot be wiped out completely; even an increase in sales could bring along an influx of fraudulent orders. However, online fraud risk can be minimized and managed well to boost your business, grow your user base and retain loyal customers. Be sure to take note of potential hidden costs and fault lines that could trip you up in the future and cost you more than you intended, making you lose more than you did initially.
Effective fraud management allows your business to grow without limits and scale effortlessly.