The Power of Positive Consumer Profiling in Preparing for Peak Shopping Season
So, here in the northern hemisphere, we’re still basking in waning remnants of sunny days and lingering high temperatures. Though we’re not wishing the sunshine away, us northerners here at ACI also can’t help but let our minds turn to the chillier times ahead with fall and winter approaching.
And we all know what fall and winter bring: shopping. Lots of shopping.
While you might be thinking that it’s far too early to be talking about the ‘other’ holiday season, our experience is that you can never be too prepared for the busiest part of the year – particularly if you’re in the retail environment where core business is increasingly being driven by seasonal buying from Halloween through Thanksgiving, Black Friday, Cyber Monday, to Christmas and the January sales.
Busyness powers the fraud business
Peak trading around the winter holiday season is vital for revenue, and many merchants across different sectors hit their annual numbers purely because of the huge uplift in sales they get in the fourth quarter of the year. But, the rise in sales volumes also bears warning, as it offers a perfect storm for fraudsters who look to exploit the busyness of the season, hiding their activities in the volumes of consumer traffic and the advantages of shipment cut-off dates and fast fulfilment options.
ACI data shows that while the number of overall transactions in the 2017 holiday season increased by 19 percent, fraud attempts in the period from Thanksgiving to December 31 increased by 22 percent on 2016 figures. So, despite the sales uplift (or maybe because of it), 1 out of every 85 transactions was a fraud attempt.
This consistent and alarming uptick in seasonal fraudulent activity demonstrates why merchants should proactively prepare for the onslaught of both customers and fraudsters who flood through their (virtual and/or physical) doors during this peak trading period. This means using every available tool to make sure that fraudsters are blocked while genuine customers are not.
Positive profiling – the newest tool in fighting fraud
Preparing for the peak season is just as much about who you’re letting in as it is who you’re keeping out. Imagine losing a new customer before they have even bought anything. If a new customer’s transaction is declined because it looks high risk, or if they abandon their purchase because of extra security measures that create friction in the buying process, that customer is unlikely to come back.
First impressions count, and during a busy holiday season when customers are looking for great deals and fast fulfillment, you can’t afford to make a mistake in rejecting their order just because they have no history with you.
Now let’s reimagine this buying scenario so that you could see that the same customer had ordered from other merchants multiple times, had good history (time on file) elsewhere and all their data matched up – you’d accept their order in a flash, securing their (present and hopefully future) business.
Screening the customer, not the transaction
The above scenario is exactly where positive profiling can serve up both a great customer experience and fraud prevention capabilities that put merchants in prime position for peak season. Powered by consortium intelligence and Big Data analytics technology, positive profiling can help merchants to successfully sort the good customers from the bad. By building comprehensive customer profiles based on detailed behavioral data from multiple merchants and externally confirmed fraud intelligence, merchants can screen the customer rather than just the transaction. Ultimately, by producing more accurate results, positive profiling can empower merchants to tailor the customer experience, improve conversion rates and maximize revenue – while blocking fraud in the process.
To paint the picture more clearly, we retrospectively applied positive profiling to data from one retailer’s 2017 peak trading transaction data and discovered that the real-time application of this approach would have reduced decline rates by 59 percent, resulting in $100k worth of additional good revenue each month. Think of the impact that can have on your business.
Failing to prepare is preparing to fail
The opportunity to ID customers as well as fraudsters can be invaluable for online merchants, especially during peak season when the fulfilment pace is faster, volumes are sky-high and revenue is most at risk from poor planning.
Positive profiling can help significantly with this identification process – supporting increased conversions through reduced friction and higher acceptance levels, as well as reduced fraud and chargebacks through highly accurate fraud decisioning.
Of course, it is important that positive profiling forms just one part of a layered approach to fraud prevention and KYC processes, working in sync with a full range of intelligence-driven tools and strategies that will ensure you can successfully reap the benefits that the holiday season offers.
ACI’s positive profiling capabilities are delivered via the Stream Analytics Engine component of our ACI ReD Shield fraud prevention solution. Check out this link for more information on the power of this capability.
Related Blog Posts
Open Payments Systems for Merchants: Don't Close Down Your Options
Remember “Open Systems”?
It was a big industry nom du jour in the 80s and 90s. Every IT system had to be open and therefore flexible and future-proof. Nobody can argue with the logic behind this; making systems easy to integrate with other systems, ensuring vendors could cooperate with one another; creating agility to improve time to market and drive down costs.
Building Trust in Open Banking with Behavioral Biometrics and Machine Learning
Strategies for fraud prevention in payments are having to evolve quickly, as new technologies emerge and digitalization of the banking ecosystem continues at pace. I spoke with Giselle Lindley, Principal Financial Crime Consultant at ACI Worldwide and Tim Dalgleish, Head of Threat Analytics, Asia Pacific at BioCatch to understand how financial institutions can use payments intelligence to build trust in this challenging environment.
Why It’s Time for Women to Rise UP
As a senior software engineer at ACI Worldwide, Rawan Shawar helps to guide her team’s priorities and enhance processes at both the team and organizational level. Recently, Rawan was selected by the organizers of Money20/20 Asia to be part the Rise Up Class of 2019.
Can Digital Payments Be Kind?
There is no doubt that the era of less (or minimal) cash is truly upon us. According to the Access to Cash Review, cash could fall to just 10 percent of all payments in the UK within the next 15 years.
Other countries, such as Sweden, have already seen significant changes – cashless payments have grown so quickly that only 10 percent of the 20 SEB banks in Stockholm now hold cash. Beyond Europe, China is leading the way with USD$12.8 trillion in mobile payment transactions in 2018.
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.
Reducing Fraud and Improving Customer Experience with Machine Learning
Julie Conroy is research director for Aite Group’s Retail Banking practice and covers fraud, data security, anti-money laundering, and compliance issues. Recently, Julie teamed up with ACI’s Marc Trepanier for a webinar, Key Trends in Payments Intelligence – Machine Learning for Fraud Prevention. I sat down with Julie to get her take on the topic.
Why Non-Functional Requirements Should be a Few of Your Favorite Things
It’s not unusual for me to be questioned by retailers as to why some payment solutions are priced differently or more expensively than others – in fact, it would be unusual not to be asked those questions when dealing daily with procurement and finance teams of major multi-national multi-channel merchants!
Keeping Up With Fraudsters: A Month Isn’t Enough
As the Government of Canada campaigns for improved fraud prevention and awareness this month, I’d like to do my part as a fellow Canadian, and shed some light on why payments need to stay a step (or more) ahead of fraudsters, today more than ever.
Local Perspectives: Real-Time Realities Across Asia-Pacific in 2019
Money20/20 Asia returns to Singapore this week, attracting payments professionals from around the vast APAC region – and beyond. The real-time and open imperative is one of the reasons why all eyes are on Asia-Pacific when it comes to payments, so I caught up with ACI payments experts representing three of the key countries within the region, to take the pulse of real-time schemes that are in varying stages of maturity.
What it Takes to be an ‘Influential Woman in Payments’ [Q&A]
Coming off the back of International Women’s Day this past weekend, PaymentsSource has recognized the Most Influential Women in Payments, spanning multiple industries including financial services, retail, investment and technology. Among the honorees is ACI’s very own Carolyn Homberger, group president, global sales. Part of the executive leadership team at ACI, Carolyn leads a team of payments professionals operating across all global regions, and plays a critical role in setting business strategy. As an advocate for the leadership and growth of women in the payments industry, Carolyn is also responsible for launching ACI’s own Women’s Initiative.