The European Commission has been very frank about its plans to achieve an Open Finance and Open Data economy. It wants to deliver a digital identity and wallet-based framework as quickly as possible. eCommerce vendors need to understand that digital identity and identity verification are going to be fundamental pillars to all customer journeys on the internet.
That’s why payment service providers are pursuing digital identity-related solutions for their platforms. Their main concern (and eCommerce vendors) is that digital payments may get hampered by obstructive compliance protocols. These compliance steps may add friction to each transaction.
Now, what if these protocols aren’t as effective at combatting fraud or strengthening consumer privacy? Digital identities are becoming important parts of the payments infrastructure itself. eCommerce vendors and payment service providers must not downplay the importance of using top eCommerce fraud prevention software tools with advanced features.
These software tools feature robust digital identification solutions. By integrating these software tools on their platforms, eCommerce vendors and payment service providers can deliver secure yet friction-less transactions for progressively demanding customers. Addressing the ever-evolving security risks is the main challenge.
Ever-Evolving Security Risks
The Internet fraud economy is ever-expanding, especially in the eCommerce sector. The fraudsters have optimized their efforts during the pandemic, often exploiting crisis situations to scam desperate shoppers and organizations. As consumer behavior shifts towards a “digital-first” mindset, the number of fraudulent transactions in the financial industry keeps increasing.
- In Pew Research Center’s Global Economic Crime and Fraud Survey of 2020, many important members of the global eCommerce industry were interviewed. The respondents reported that between 2019-2020, $42 billion was lost due to eCommerce fraud.
- Imposter scams or account takeover fraud were the most reported form of eCommerce fraud and accounted for almost $700 million in losses across the globe.
- Cybercriminals are well-informed about the eCommerce market. From isolated attacks, these skilled criminals have shifted into a full-scale “Cyber-fraud Economy.” It’s a very sophisticated ecosystem where one fraud attempt leads to another fraud. Some actions of such hackers are hard to detect as they bridge other fraud types together.
Amidst all these demands to be more secure and more digitalized, financial institutions and eCommerce vendors face an interesting challenge. Although the average online shopper wants simple, secure, and friction-free online experiences, cybercriminals keep finding new and innovative ways to disbalance previous steps.
They keep infiltrating online channels and manipulate the account information of thousands of customers. Almost all of these fraud attempts are unique in some way. Some attempts are subtle, some are obvious and isolated, whereas others are interconnected to larger webs of fraud.
The need for an eCommerce fraud prevention software with device intelligence features has never been more urgent.
What is Device Intelligence?
An eCommerce fraud prevention software tool with device intelligence features will equip online payment platforms with the ability to analyze the devices of shoppers. The software will instantly analyze the user’s device and look for associated identities. Let’s say you use your own digital identity to transact across multiple digital channels.
Whether you do it via mobile applications or your desktop browsers doesn’t matter. An eCommerce fraud prevention software tool with device intelligence features will instantly assess all your digital identities. If you use different digital identities to access different platforms, you will be viewed suspiciously by the software.
The software tool will then re-verify your identity, assess and mitigate the risks associated with authorizing the transaction in real-time and make a data-based decision. All of this happens within seconds, so the customer experience is not hampered at all during this process.
An eCommerce fraud prevention software tool with device intelligence features should also have other features that boost security but also optimize customer experiences. Such features include –
- SCA Optimization– The software tool will automatically facilitate strong customer authentication (SCA) on the payment gateway to ensure the vendor is compliant with PSD2 regulations. It will also optimize SCA exemptions and allow non-risky transactions to “pass” so that regular shoppers have positive check-out experiences.
- IP/Geolocation Assessment– To make sure that the data assessed during the “device intelligence” assessment is accurate, the software tool will check the shopper’s current address. Does his/her IP geolocation match up to the addresses mentioned in their digital identities? If not, we might have a fraudster on our hands!
- Behavioral Analytics– Automatically analyze the user’s behavior on the eCommerce platform. The software tool addresses questions like – what links is the user clicking, is the user a bot, etc.
- Digital Identity Management– The software tool will consolidate all customer account management activities into single solutions. Managing the digital accounts on the eCommerce platform becomes much simpler thanks to this data consolidation feature. As a result, fraud detection is less complicated. Plus, established users of the platform still get to receive frictionless payment and check-out experiences.
Regulatory frameworks for eCommerce vendors are changing. So are the actions of seasoned fraudsters. So, implementing the most advanced data breach protection solutions is more important than ever for eCommerce vendors.