By Mirit Elyahu
The majority (62%) of online merchants in the UK are confident in their ability to prevent fraud, according to a survey recently published by Riskified, the fraud management solutions provider enabling frictionless eCommerce. Consumers, however, don’t share this confidence. Only 34% said they trust merchants to protect them against online fraud.
The acceleration brought on by the COVID-19 pandemic saw global eCommerce sales grow by 27.6% YoY to reach over $4 trillion in 2020. But as the world shifted to online retail, both merchants and fraudsters found ample opportunity. Globally, 72% of retailers said they recorded an increase in fraud attempts since the pandemic began, and the majority of them said they expect fraud attempts to continue increasing over the next year.
The eConfidence gap: trust in existing fraud prevention practices looks different for online merchants and shoppers
The online confidence gap
Earlier this year, Riskified commissioned a survey of 4000 consumers and 400 retailers across the UK, US, France, and Germany. The survey, published this month, found that retailers and consumers are aware of the risks and costs attached to online fraud. It also made clear a discrepancy in online confidence, or eConfidence. In the UK, a third of merchants said that fraud is a significant burden to profitability. Shoppers echo the risk: 15% of UK shoppers reported falling victim to some kind of online shopping fraud in the past year. Still, 82% of merchants in the UK believe they are doing everything they can to stop online fraud, and 87% say they are confident that their company has all the tools needed to fight fraud.
It is clear from the findings that in addition to damage caused by fraudsters, merchants are also suffering from the fallout of their overconfidence. Beyond the more direct costs of fraud – chargebacks, lost merchandise, fees, and false declines, to name a few – there is the damage to brand reputation and loss of customer loyalty and future revenue. According to the survey, customers tend to blame merchants for the fraud that happens on their sites, not the fraudsters. The damage can be particularly grave when it comes to store account security and account takeover fraud (ATOs).
For UK merchants, there is another concern. Most merchants ranked revenue loss caused by fraud-prevention methods as their “biggest problem.” They ranked 3D Secure and other two-factor authentication protocols as having the largest negative impact on revenue. While two-factor authentication does stop a fair number of fraudulent transactions, the added friction can drive away valuable customers. Many merchants believe that they are forced to make a difficult tradeoff, sacrificing growth and bottom-lines for security or vice versa. But fraud and friction are not a given. Technological innovations can help merchants balance the necessity of preventing fraud with that of minimizing friction and providing a superior customer experience.
Striking the right balance
The eCommerce balancing act requires both merchants and consumers to reach a level of confidence that enables smooth, delightful online shopping experiences. Riskified calls this “eConfidence.” It is achieved when customers can trust merchants with their business and their personal information, and when merchants are confident that they are not losing revenue to undue friction and false declines.
Riskified’s eConfidence report reveals the complete survey findings, including the dramatic difference between how retailers and consumers view the threat of eCommerce fraud. It outlines how fraud impacts customers’ confidence, their loyalty to businesses, and merchants’ bottom line. Download your free copy today.
