If only everyone with skill and ambition followed the mantra, “better to fail with honor than succeed with fraud”! Even in today’s digital age, while businesses have new ways to grow online, fraudsters also find ways to scam companies and their customers. According to the Asia Pacific Fraud Survey 2017, Indians are especially vulnerable to online attacks, with 48% affected by online retail fraud. Merchants must take responsibility for preventing fraud on their online stores. Failure to do so could lead to loss of business, financial damage, and a tarnished reputation—something that can be hard to rebuild.

HOW ONLINE FRAUD AFFECTS ONLINE MERCHANTS

To better understand the loss of business and growth opportunities for online businesses due to fraudulent transactions, let’s assume two different scenarios. These scenarios illustrate how exactly the merchant’s business would be put in jeopardy due to an absence of strong anti-fraud protections:

BEARING THE LOSS OF FRAUDULENT TRANSACTIONS

If a customer believes that their card has been used for a fraudulent transaction on a website, they can raise an alarm and flag this to their bank. If the bank agrees with the customer that the transaction is in fact fraudulent, the customer would receive their money back—and the impact of the refund in such a scenario would be borne by the merchant. Additionally, while the merchant would have delivered the goods to someone, a fraudulent miscreant in this case, they would still not receive any payment for the goods.

LOSS DUE TO A FALSE POSITIVE

When a merchant’s anti-fraud system isn't advanced enough, genuine transactions may be wrongly declined. This prevents interested customers from making purchases, leading to a poor customer experience. Over time, this can result in lost business and damage to the merchant’s reputation. In today’s competitive market, customers have many options and are unlikely to return after a bad experience.

However, small businesses aren't without hope. E-commerce enablers and payment gateways are actively addressing online fraud. They provide tools and processes to combat fraud, helping small businesses thrive online. By staying vigilant and partnering with the right providers, online businesses can minimize their exposure to fraud and focus on growth.

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TOP-NOTCH ANTI-FRAUD FEATURES IN PAYMENT SOLUTIONS

With the help of the right payments solution, small merchants are able to access technology that aptly reduces the fraudulent transactions on their platform, while increasing the success rate of genuine transactions. This factor also augments the experience of genuine buyers, thus inspiring their revisits on the platform.

Here’s some of the significant features small businesses should look for in their payment gateway:

Real-time monitoring of transactions: Advanced payment gateways should be able to monitor transactions in real-time, deploying an algorithm to discover any markers of a fraudulent activity and preventing it from taking place.

Better Success Ratios: Intelligent payment gateways improve the ratio of transactions that succeed by ensuring that legitimate transactions are clearly identified and permitted to proceed, whereas fraudulent transactions are rejected.

Integrated fraud management: Payment gateways must meet the highest level of PCI DSS level of compliance. Beyond this, though, your payment gateway should integrate its own antifraud mechanisms with card scheme protections, such as CVV2/CSC, AVC and 3D Secure, providing your customers with extra layers of security.

In-house software: Lastly, ensure that your payment gateway’s anti-fraud software is built and operated in-house. This will bring you confidence that the software can be accurately and rapidly updated as different threats materialize, and adjusted to meet the needs of your online business as it grows and expands.

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