Creating a balance: fraud prevention strategies and revenue optimization

With fraud losses totaling $7 billion in the U.S. and $30 billion globally, retailers must find ways to protect their bottom line from erosion while growing the top line through sales.

What happened

It can seem like an either/or proposition for retailers. They can implement fraud prevention strategies that minimize payment risk but may lose sales and customers. Or, they can have minimum barriers that make it easy for customers--and fraudsters-- to complete their purchases.

Why it matters

Retail fraud has always been a pain. Forty percent of fashion and fast-moving consumer goods (FMCG) retailers surveyed said online payment fraud was their biggest fraud risk. And, with the increase of consumers shopping online throughout the pandemic, coupled with retailers adopting new payment methods, online fraud has surged.

According to the annual Fraud Report published by the MRC and Cybersource, every single indicator for assessing payment fraud impacts has increased since 2019; from more revenue being lost to payment fraud to more eCommerce orders being rejected and more eCommerce orders leading to chargebacks. Our research found that, in comparison to the days before COVID, around three-quarters of merchants reported increases in both fraud attempts and fraud rates by revenue

"Some retailers may view fraud losses as a cost of doing business, but those retailers may not recognize just how much of a financial burden fraud is," said Carl Tucker, Head of Cybersource Managed Risk Services. "As the volume of purchases has increased, especially with card-not -present fraud, retailers can easily see doubled or tripled fraud attacks."

This news brief is based on reporting published by Retail Dive on 2021-10-11. The original report is linked below.