We often associate nature with the survival of the fittest. However, we often forget about the need to take calculated risks to survive, especially if we aren’t the fittest around. In a similar concept, merchants need to take calculated e-commerce fraud risk to survive.

The good news is, merchants have become increasingly aware of the need for fraud protection services. Most have either opted for in-house verification tools or outsourced to third party solutions. However, most solution providers, especially mass market solutions, are designed to be risk-averse. This means that these verification tools are mainly focused on detecting threats and reducing e-commerce fraud risk. While these solutions may have had some successes in fight fraud, many merchants fail to realize that their online sales had taken a hit as well during their fight against fraud. As such, merchants are unable to attain their full business potential.

Why is taking zero e-commerce fraud risk detrimental, especially in the long run?

1. High rejection rates

Fraud solutions often reject genuine transactions that have a borderline score in fraud tests. This is due to the unwillingness of the solutions of taking risks, and they would rather reject these transactions.

2. Reduced potential to expand overseas

Cross-border expansion is a risky venture, and risk-averse fraud solutions are not well-equipped to deal with cross-border sales. As such, only safer markets are potential expansion opportunities, limiting the growth potential of your business.

3. Unnecessary buying restrictions

Many fraud solutions make merchants impose unnecessary buying limits, such as amount based limits where customers are unable to make purchases above a certain amount. This becomes an issue when VIP or high spending customers wish to make higher purchases but are unable to. As a result, merchants cannot capture revenue opportunities with these verified clients as they should have.

What can you do?

Fighting fraud should not come at the price of sacrificed revenue and lost sales. Online fraud is part of online sales. If merchants are experiencing zero fraud, the chances are they are losing sales at the same time. (If you don’t believe this, take a look at your rejection rates and think about all the sales you have lost!). Merchants must shift from a risk-averse, threat-detection policy to focus on risk management and business growth, to get the best out of the fight against fraud.

Back to our photo, the crocodile is one of the most fearful predators, but the raccoon has taken the risk to ride the crocodile across the river. The message is clear: if you are always afraid to take risks, you will never get to reap the benefits. The same logic applies in our fight against fraud; we have to take some risk to get more out of our fight against fraud.

What CashShield can do for you

CashShield’s unique Optimized Fraud Risk Management Algorithm optimizes your business growth and e-commerce fraud risk. This means that we consider all orders as a portfolio and focus on the positive elements from each transaction. This is different from risk-averse approaches as we are able to manage each risk decision carefully and pass genuine borderline transactions. Merchants can therefore get much greater acceptance rates and revenue boost from optimization. CashShield can help you eliminate fraud without compensating business potential.