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LOSSPREVENTION&SECURITY 23


MANAGING MULTICHANNEL FRAUD U


K online merchants are bucking the downward business trend and expecting continued growth in 2012. But they are also failing to monitor corresponding fraud risks, according to the latest industry survey. The eighth annual UK Online Fraud Report, an independent


survey of 200 e-tailers undertaken by Visa subsidiary and fraud prevention services provider CyberSource, found digital goods businesses were growing particularly strongly; those anticipating growth in 2012 were forecasting an average 33% increase in online revenues. In all, 73% of merchants expect online revenue growth in 2012 while 24% forecast no change. They called out mobile, in particular, as a channel experiencing rapid growth. Dr Akif Khan, director of products and services for CyberSource in Europe, Middle East and Africa, pointed out that 38% had a dedicated mobile website and 26% had their own app.


“The mobile channel presents a real opportunity for merchants,”


he said. “But just a quarter of those merchants are tracking fraud originating on their mobile site and only 16% are tracking fraud through their mobile apps. With interfaces often streamlined to make mobile commerce simpler for the user, the fraud risks on mobile channels are different and still need to be properly understood. If fraud costs are to be managed effi ciently across multiple channels in 2012, each should be measured and confi gured individually.”


Dr Khan told Retail Technology retailers should look for a fraud screening platform or service that is fl exible enough to apply different screening strategies across customer contact and sales channels while using a common data schema or interface. “A different value in the data fi eld to identify the channel and rules to route the transaction accordingly is advisable,” he said. “Yet 62% are routing mobile transaction screening through e-commerce systems.” The survey also found varying impacts of fraud by sector, where


51% of travel vendors and 46% of those offering services selected revenue loss as the greatest fraud concern. Dr Khan said the travel sector was a good example of one that needed to fi ne tune its screening strategies, considering that it was less likely consumers would make high-value purchases like holidays via a mobile device than more familiar e-commerce channels. For physical goods retailers the challenge was different: 50% said their greatest concern was inadvertently turning away good orders. For digital goods businesses the main challenge was the cost of manually reviewing too many orders (41%). Since the 2009 survey, the percentage of merchants using manual review has fallen by 10%, with 61% of merchants reporting


that they engaged in manual review in 2011. The practice remained most common in small businesses where one fi fth of respondents reviewed almost every order. Very large merchants were perhaps unsurprisingly the most effi cient users of manual review given their greater resource, examining only 11% of orders on average. Manual order review rates were fairly consistent across business


sectors, with each just a few percent either side of the average rate of 22%. However, manual review remains ineffi cient: merchants ultimately accept 75% of the orders that they review. Khan said these results suggest merchants should devote increased attention to improving their automated order screening procedures to increase detection accuracy and lower the need for manual review. Khan concluded: “To help satisfy ‘Customer 3.0’ while optimising


profi ts, retailers should strive to offer a consistent shopping experience across channels. With this comes perhaps the greatest challenge; combining consumer choice at the front-end with unifi ed payment platforms and fl exible fraud management systems at the back-end—helping to keep friction low and confi dence high.”


SPAR UK won Retail Security Initiative of the Year award at the 2011 Retail Systems awards last October for implementing Commidea’s Ocius Sentinel system to remove sensitive card data from SPAR UK’s electronic point-of-sale (EPoS) and associated networks.


Roy Ford, SPAR UK retail IT controller, said: “The integration


has removed SPAR’s need to be constantly reengineering its EPoS payment system to meet the ever increasing demands for transaction data security.”


“This means we are no longer storing customer credit card data


at store level, and all data is forwarded straight to an offsite server for compilation and forwarding in a more secure way.”


MARCH/APRIL 2012 RETAIL TECHNOLOGY


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