KB: During the last three months, we have seen a massive growth in eCommerce sales, according to our analysis; global online sales in the general retail sector In April were up 209 percent, in May 81 percent. Were you surprised about these growth rates?
DG: No, I wasn’t. Consumers purchased DIY items, homeware, electronic goods – items to support work, communication, school and entertainment at home; the growth rates we have seen reflect how people around the world have been adapting to life in quarantine.
And it is amazing to see how quickly consumers and businesses adapted, even smaller merchants, in terms of reorganizing business models and accepting new payment methods. Cafes turned into takeaway or delivery businesses, restaurants into drive-through grocery stores, and many set up websites and were able to accept new digital methods of payment within days. In just a few months, we have seen digital adoption rates that usually would take years to achieve.
KB: What do you think will be long-term ramifications for Commerce?
DG: Consumer behavior has changed and many of these consumers won’t be going back to the way things were. Millions are now used to getting groceries and many other essential items delivered to their doors. Consumers who were reliant on cash before the crisis have switched to digital payment methods, because they are safer and more convenient. Corner shops, convenience stores and smaller merchants that previously preferred cash will continue to accept digital and electronic payments. For businesses and consumers, electronic payments and digital payment services have become crucial to navigating the crisis.
Many merchants are likely to continue accepting electronic payments; in the long-term, real-time payments could offer a cheaper, faster way to pay than cards, which have interchange fees and slower settlement to the merchant. We expect to see greater innovation, and the launch of many more payment services into the market to capitalize on the shift away from cash.
KB: What about fraud? According to the eCommerce Tracker, global fraud attempts are also on the rise.
DG: Retailers and consumers must be extra vigilant as fraudsters use the current situation to obtain and use their financial data and information. Fraudsters are agile, creative and sophisticated, and fraud providers need to be equally nimble to protect consumers. This crisis has created a massive need for efficiencies, accuracy, speed and ingenuity, and perhaps more collaboration and sharing of intelligence too. ACI’s fraud and risk management solutions address all these issues. Relying on AI and ML capabilities, positive profiling, and consortium data enables merchants to adapt a multi-layered approach to fraud prevention and decrease fraud rates during these challenging times.
KB: Chargebacks are also on the rise. What are the reasons behind that?
DG: Non-fraudulent chargebacks have risen 25 percent, with many disputes involving consumers claiming that services or goods weren’t delivered or cancelling recurring payments. Airlines and Ticketing sectors are experiencing even higher chargeback rates due to the high number of consumers trying to obtain refunds from cancelled flights, instead of accepting the vouchers many airlines and travel companies have offered. Friendly fraud is also rising, with genuine cardholders purchasing items and either claiming not to have received them or not to have been reimbursed for returned items. Merchant delays in processing refunds due to resource challenges have contributed to increases in friendly fraud.
KB: What are the lessons merchants can learn from the last few months?
DG: Businesses need to optimize their supply chains; a scalable business will be necessary in the future. Payments modernization will be crucial to stay competitive, and we are already seeing many opportunities in this area as project requests for enablement of EMV and contactless payments, and digital wallets are on the rise. And there will be more focus on security. Payments modernization needs to go hand in hand with modern and sophisticated fraud prevention.
To find out more about ACI’s analysis of hundreds of millions of eCommerce transactions from global merchants, read the press release.