Anti-fraud strategy: Help boost your sales

An anti-fraud solution must be a balance between revenue, fraud prevention and the e-commerce shopping experience. Protecting your business means taking care of your customers and implementing a good strategy that helps you boost your sales by largely avoiding false positives .

Many businesses believe that protecting themselves from fraud means having a solution that identifies purchases that could be considered suspicious and prevents them from being made in order to avoid chargebacks, however, 90% of these declines are valid transactions, which means you stop earning large sums of money.

One of the most common examples of an erroneous decline (also called “false positives”) is when a cardholder makes a large purchase and when entering the shipping address, they point to a location other than the customer’s billing address , which is when an inefficient solution wrongly identifies them as a fraudster.

The consequences for your e-commerce are enormous, including: 

• Decrease in income.
• Dissatisfied customers.
• Bad reputation.

The True Cost of False Positives 

There is no better way to understand a problem than to put it in numbers, so imagine this:

Every $1 of erroneous declines costs merchants $13, while 58% of customers who are denied a purchase do not return to that business . The value of each customer becomes even more quantifiable, and the investment required in marketing to replace those customers is even more expensive.

According to a study conducted by Aite, in 2021 losses due to false positives were almost 70 times higher than losses due to fraud, while 62% of merchants mention that their erroneous rejection rates are increasing.

It is therefore no surprise that in this industry where competition is the order of the day, a great shopping experience can be the key differentiator for smart retailers.

Unhappy customers = Bad reputation 

Although false positives may be common for some e-commerce sites, the reality is that customers are not happy about being rejected; on the contrary, it causes frustration, discontent, and even embarrassment, which has an impact on brand reputation, shareholder value, and customer loyalty. 

Today, social media is the perfect tool for customers to share their shopping experiences, where detractors are twice as likely to talk about bad brand experiences. 

But that is not the only fact, the importance of a good shopping experience is translated as follows: 

• A customer is 4 times more likely to turn to your competitor if the problem is related to service, rather than price or product. (Bain & Company)
• Repeat customers spend 2 times more than new customers. (McKinsey )
• 96% of consumers rank customer service as an important factor in their choice of brand loyalty. (Microsoft)
• A promoter is worth 1400% more than a detractor. (Bain & Company)
• For every customer who complains to customer service, there are 26 unhappy customers who don't bother to contact the company. (TARP Research)

With this, e-commerce businesses must be aware of:

• Having a fraud prevention system that takes into account customer behavior and purchase history is essential to avoid purchase rejections.
• Have a chargeback prevention guarantee, combining hybrid technology and artificial intelligence.

Both elements are the perfect allies to improve the user experience and reduce sales losses to a minimum.