Securely Growing Online Sales in 2018: An Australian Perspective
Back in November 2017, I participated in a panel discussion for NORA (National Online Retail Association), where I looked at fraud trends in Australia over the previous holiday shopping season and made predictions to help retailers prepare. Now looking back, I am sorry to say that my predictions were painfully accurate.
Why sorry? Because although the data indicated significant growth in online retail sales AND corresponding significant growth in fraud attempts, my message about how retailers can prevent fraud just did not seem to reach as many as I’d hoped.
What we saw was an impressive 45% transaction growth during the period 1 November 2017 – 31 January 2018, compared to the same period the previous year. The Sunday prior to Cyber Monday (78%), Black Friday (77%) and Cyber Monday itself (74%) experienced the largest transaction volume uplift. Surprisingly, Click Frenzy (an Australian initiative) experienced a miniscule increase of less than 2% over the previous year.
Although some key dates did see a fall in fraud rates, what we witnessed overall was a huge increase in fraud over the holiday season, with a whopping increase of 71% YOY. Peak day for fraud was Christmas Day itself, supporting what I like to refer to as the ‘Melbourne Cup effect.’
In Australia, the Melbourne Cup is held annually and is regarded as the nation’s premier thoroughbred horse race. It is known to be the richest ‘2-mile’ handicap in the world, with a purse of more than AUD $6.2M in 2017. The race is run at 3pm on the first Tuesday in November and is well known locally as ‘the race that stops the nation.’ In the State of Victoria, where the Cup takes place, it is even a public holiday – and most Australians stop to watch it. Many once-a-year punters place their annual bet on this race.
The ‘Melbourne Cup effect’ is a theory that if you are going to commit a crime, doing it during the Melbourne Cup race would be a good time, as (almost) everyone across the country is distracted by it. The same could be said for Christmas Day too. Whilst many are distracted with family get-togethers, others are shopping online with their freshly unwrapped Christmas gift cards, so there is a lot of ‘noise’ with genuine sales and, conversely, a lot of opportunity for fraud to be perpetrated.
So here we are again, we have experienced another year of aggressive fraud growth during the 2017 holiday shopping season. As we work through disputed transactions and chargebacks, and take time to review the fraud losses, it is also time to start preparations for this year. With this knowledge, retailers can arm themselves in advance and tackle the problem head on. After all, knowledge is power!
The key is closely examining the fraud transaction data; both financial and non-financial. This data can be utilised to build profiles of the fraudulent and suspect activity. Data that is essential to profile includes card issuing country, shipping country, billing country as well as device intelligence – IP address, geo-location, Apple vs Android, operating system, browser language, ese of TOR exit nodes, and device time on file.
Adaptive machine learning profiles that can action activity in real time are best practice in this space, because they evolve with the seasons, tracking genuine customer spending as well as changes to fraudsters’ modus operandi. Profiling in this way applies a risk assessment of activity to highlight high-risk transactions, and conversely, quickly identify genuine customers. This real-time profile is used to direct actionable intelligence strategies, such as denying transactions (declines) and applying authentication to only those transactions with a high risk of fraud, leaving the genuine customers to get on with their purchases.
Using this intelligence to identify and action high-risk transactions in real time is a sure bet for reducing fraud losses and importantly, reducing friction for genuine customers.
Join Giselle Lindley for a Roundtable Discussion at Inside Retail Live 2018
Date & Time: Wednesday, February 28, 12.50-1.35pm (Day 1)
Topic: The Latest in Card-Not-Present Fraud
Brief: The rise in eCommerce purchases presents significant risk of financial loss from fraud and disputed payments with Card Not present (CNP) fraud now counting for 78% of all payment related fraud in Australia. At this roundtable discussion, Giselle Lindley - ACI Worldwide Principal Fraud Consultant, APAC region will share current fraud trends and strategies.
Stop by and see the rest of the ACI team at Booth 78/79, and make time for a one-on-one meeting with an ACI expert.
Related Blog Posts
How Banks and Acquirers Can Deliver on the Benefits of PSD2 SCA Exemptions and Differentiate Their Merchant Services
PSD2 is an opportunity for acquirers to differentiate themselves by delivering improved services to their merchants, if they implement modern solutions to manage SCA exemptions. This will drive the best customer experience in combination with regulatory compliance.
PSD2 and Strong Customer Authentication – What's in Store for Merchants?
With the final pieces of the Payment Services Directive (PSD2) puzzle coming together, payments businesses are highly focused on meeting their compliance obligations. But the forthcoming changes will affect everyone in the payments chain – and it’s important for merchants and PSPs to understand the practical implications for their businesses and customer relationships.
Transforming Telecom Companies in a Retail World
The recent MVNO World Congress in Amsterdam brought fascinating insights into the changing telecom industry, particularly around the opportunities that lie ahead for Mobile Virtual Network Operators (MVNOs) and how they can they can cement their position in today’s fast-paced climate.
Beyond Borders: Navigating the Challenges of eCommerce Expansion
eCommerce continues to flourish, with impressive growth figures year after year. In 2018, global online sales reached almost $3 trillion, and are expected to hit $4 trillion by the end of 2020.
Despite eCommerce taking an increasing slice of the retail pie (which could now be as high as 15 percent according to recent figures), it is increasingly challenging, with competition and cost pressures creating significant issues for merchants of all sizes.
Payments and Fraud: The Paradox Twins
Digital commerce through web and mobile is where merchants predominantly experience shopper growth today. This has become a hugely important domain for their focus. It offers a means for international growth, new market penetration and a way to engage with shopper-hungry Millennials in their culture. Merchants frequently adopt a Digital-First, eCommerce-First or Mobile-First strategy to ensure full corporate buy-in to this strategy.
Knowing New Customers – And How Shared Data Helps in Fighting Fraud
As the eCommerce industry continues its rapid growth, the lines between physical and digital shopping are becoming increasingly blurred. These changes are creating a number of challenges for merchants, not least around customer visibility and fraud prevention.
Adding a Global Payments Layer for Future Growth
Digitization has changed the payments industry completely and irrevocably. Cash payments are in full retreat, as more people pay digitally – with more than 1.6 billion people now shopping online. The digital customer expects an extremely fast and convenient payment experience, with high security standards, and immediate availability of payments information.
Let’s Get Phygital: eCommerce Is Coming To A Store Near You
While payments vendors continue to pitch and strategize with a focus on omnichannel, the omnichannel story has already moved on.
Make no mistake – omnichannel remains important and the best vendors have solutions that provide a single cloud payments service capable of delivering a single view of the customer across stores and digital channels. And the best retailers utilize these solutions to deliver efficient cross-channel shopping experiences. Meanwhile, many other retailers get by (though seldom rise to the top) with a siloed approach.
Around The World: Taking Stock of Global eCommerce in 2019
As I head to #NRF2019 in New York City next week, I’m excited to see how some of the biggest retailers and merchants see the industry evolving over the coming year. What trends they think are going to shape 2019, and which of 2018’s buzzwords can be put to bed.
Fraudsters Don’t Wait for Peak, So Neither Should You: 2019 Fraud Strategy Starts Now!
In existence for barely two decades, eCommerce has transformed not only the way we shop, but also how retailers plan and execute their marketing strategies around the peak shopping season. Now that we’re deep into this period, retailers will have prepared for changes in buyer behaviors, relaxed their strategies to be within the limits of manageable review rate, and most important of all, put strategies in place for increased fraud attempts.