This year, e-retailers are gearing up for a holiday season characterized by a global recession, rising cost of living and supply chain disruptions.
In this period, e-merchants must manage a very high peak of orders, offering a good shopping experience to their customers. To make the most of the season by avoiding fraud, e-retailers need to consider two key trends.
The rise of m-commerce and the risks of fraud
According to the latest figures from Fevad, purchases via mobile devices continue to grow. Mobile sales would represent 22% of the revenue of retailer sites, reaching 35% for the leaders. A study by Stripe of French commerce and m-commerce also revealed that nearly one in two French people (48%) now shop via their smartphone and that mobile devices generate around 63% of the world’s internet traffic. .
However, despite its convenience, m-commerce can be a frustrating experience for consumers and commercial sites alike. Online shoppers are used to a level of convenience, speed and ease that computers or physical stores cannot provide. Its tolerance limit for the slightest friction is the lowest. According to Shopify, consumers shopping on smartphones and tablets have the highest cart abandonment rates at 86% and 81% respectively.
Increased order volume during the holidays automatically leads to an increase in fraud. This inevitably affects the turnover. At the same time, how fraud risk is assessed per device over the remainder of the year can lead to false positives for legitimate orders. This results in a reduction in the number of sales and impacts on the overall performance of the business. Behaviors considered suspicious in the rest of the year – change of place of order or incompatibility between billing and delivery address – are often justified during the holidays. However, just as mobile generates more traffic from legitimate buyers, it also attracts fraudsters.
Who says new sales channel, says new vulnerabilities. E-merchants have a window of one hour to process an order. This requires all elements of the supply chain to operate smoothly and instantly, including fraud checks. Those who rely solely on human analysis to prevent fraud risk creating a bottleneck, delaying the order and degrading the customer experience. In order to take full advantage of m-commerce and the millions of daily mobile transactions, it is essential to invest in initiatives such as simplified navigation, reduction of website loading times, optimization of the payment process, all reinforcing fraud prevention measures.
Fraud techniques target digital wallets
Lack of payment options is one of the leading causes of cart abandonment, impacting both conversion rate and customer satisfaction. In France, 82% of consumers abandon their basket if their preferred payment method is not offered, according to a study by OpinionWay carried out with 1,001 people in 2021 on French and mobile commerce.
The means of payment have changed a lot in the last two years. Electronic wallets are one of those that are experiencing an increasingly important boom. This responds to the growing desire for fast, convenient and secure payment. In 2021, e-wallets accounted for almost half of online payment transactions worldwide and their market share is expected to increase from 49% to 53% by 2025.
While electronic wallets offer levels of protection that limit technological vulnerabilities, they are not immune to fraud. Transactions made via e-wallet can be fraudulent and lead to chargebacks. There are four fraud techniques that can target this payment method:
- the creation of new accounts using data stolen from banks and personal cards;
- identity theft to convince the mobile operator to transfer data stored on the victim’s SIM card to the fraudster’s phone;
- the use of deepfakes, masks, artificial fingerprints and false voice recognition data to bypass biometric authentication;
- social engineering such as phishing, phone scams, remote device takeover, and other methods to hack electronic wallets.
E-merchants must therefore remain vigilant when validating transactions from this supposedly secure means of payment. But they must also avoid falling prey to overly restrictive fraud management. Too much risk aversion leads to false positives and lost sales.
With ever-changing shopping behaviors and the current economic climate, merchants need to stay agile, preparing for any kind of scenario during and after the holiday season. The most reliable and effective fraud prevention solutions are those that rely on an extensive international network of merchant websites. Crossing all this data makes it possible to identify legitimate customers, even those who place a first order, and eliminate doubts linked to suspicious behaviour. The ability to make real-time decisions is also essential to ensure efficiency, accuracy and scalability, regardless of sales volume.