E-merchants are on the front lines of cybercrime and must evolve to stay ahead

It’s easy to forget that the Internet is still in its “Wild West” era, where the frequency, complexity and devastation caused by fraudsters only gets worse with time.

As the entry point for most online transactions, retailers are on the front lines of the fight against cybercrime and bound to interact with malicious actors.

To combat these criminal entities, retailers need to step up their security. The problem is that while stricter verification and authentication procedures can help weed out fraudsters, they also impact the good, honest customers who just come in to shop.

A good analogy for this is to compare the retail experience with the experience at an airport. By adding additional checkpoints throughout the customer experience, retailers are lengthening the queue to access their services, such as multiple checkpoints at an airport to pass through security – this is not a experience you want to repeat.

But in an age where customer choice is endless and patience is in short supply, compromising the customer experience is risky, even at the cost of better security. Because these days, a frustrated customer is a lost customer.

So the question is, how can retailers increase security without turning away current and future customers?

Fortunately, advances in digital technology are enabling another generation of security better suited to a digital world, one that doesn’t impact the user experience, but instead elevates it. However, online retailers need to ensure that they are digitally mature enough to adapt to this technology.

So e-retailers who want to make their customers, operations and reputation as secure as possible, while improving the user journey experience, will first need to embark on their own transformation journey.

And that starts with redesigning their authentication process from the ground up.

An accelerated landscape

The future of online retail has never looked brighter. The 2020 crisis pushed many reluctant and resistant shoppers online for the first time, while deeply reinforcing these habits among pre-existing digital consumers.

As a result, the world of e-commerce has never been more mainstream, with customers of all demographics now opting for the speed and convenience of online channels over physical channels. For example, digital subscriptions have quickly become the preferred choice for most customers, and businesses with this model, with searches for Zuora finding that the subscription economy has grown 435% over the past 9 years.

It’s no surprise, then, that 61% of consumers say they will continue to spend more online on an ongoing basis, according to
a 2020 report. And this should continue, with the the rise in global e-commerce sales is expected to last four to six years.

However, with more opportunity, more risk, and more and more, the shining star of this golden age of e-commerce is being erased by the growing threat of cybercrime. And with cyberattacks becoming more common and complex, businesses are exposed to everything from reputational damage to loss of customers.

Since bad actors now use the same authentication mechanisms that retailers use to verify customers into their systems, for example one-time access codes (OTPs), scams such as account takeover (ATO) – when cybercriminals impersonate a customer to gain control of their account – are also increasingly common.

And while there’s no panacea to such a big problem, it’s still possible for retailers to make these types of attacks much more difficult for fraudsters.

A mature career

The urgency to find solutions that help organizations meet their growing fraud and compliance obligations has never been greater – tools that combine robust authentication measures with an exceptional customer experience.

And the key to that is being able to take advantage of truly digital solutions that bypass channels that have long been compromised by scammers, such as one-time passcodes sent via SMS.

To achieve this, e-merchants must digitally mature their operations to enable the creation of strong customer identification strategies that facilitate the authentication of genuine customers and weed out malicious actors using stolen credentials or other techniques to defraud the company.

Being able to prevent these forms of attacks in a streamlined and transparent way can have a domino effect on preventing other forms of online fraud. For example, preventing customers from having their money stolen also protects the seller from additional risks associated with chargeback fraud and payment fraud, further protecting their bottom line.

To achieve this, their approach to online authentication must be transformed from the process-driven disruption it is currently for so many people, to a frictionless path to secure transactions, repeat purchases, and loyalty.

With more customers and fraudsters online, retailers need to create a robust digital ID strategy that not only protects customers, but doesn’t turn them away. By embedding authentication into the customer journey through truly digital tools like biometric technology, businesses improve user experience, can identify repeat customers, deliver personalized offers, and build lasting relationships of trust with them.

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