Merchants Black Friday balance: customer experience and fraud prevention

A seamless online checkout experience is a constant and evolving responsibility of ecommerce merchants. Black Friday provides not only the opportunity for more sales, but the customer expectation of usability and ease, strict data regulatory compliance, and lastly, the threat of increased fraud. With so much to balance, it’s essential to understand what fraud professionals are facing here, and the right solutions to implement before the holiday season starts.

What are fraud managers up against?

Black Friday presents a number of challenges in fraud departments, including:

atypical, highly seasonal shopping behaviours and fraud trends;

increased staff and systems, scaled to meet large volume increases;

strict shipping deadlines met without losing due diligence in fraud checks;

Essentially, Black Friday transactions look different, they are in great numbers, and they each need to be processed more quickly than ever. Fraud professionals are expected to uphold a faster turnaround time, higher throughput, and the ability to quickly adjust fraud models and strategies. Failing in any of these areas can lead not only to hefty fraud losses, but unhappy customers. Success is especially important during the holidays, as no one is happy with a delayed shipment or false decline.

According to a recent study by 451 Research, one in three US consumers, and two in five European consumers, reported they would be “unlikely to do business” with a merchant who declined them falsely. When customers have an emotional tie to their purchase, such as a gift for a loved one, the stakes are even higher for merchants. It is imperative to find the right balance between stopping fraud and ensuring a positive customer experience.

How do you find a balance?

There are two distinct areas of importance to examine when you set out to balance customer experience and fraud. The first critical area is the robustness and scalability of your systems. Adobe reports that in 2018, US shoppers spent USD 7.9 billion on Cyber Monday, versus total 2018 US ecommerce sales of USD 517.4 billion. For the average merchant, Cyber Monday sales were over 5.5 times higher than an average day.

Can you quickly scale to meet such large traffic increases without any degradation in your service? This is critical to avoid delays or other bad customer experiences.

Another essential area to consider is the quantity and quality of the data you track. This includes both internal data, such as customer information and transaction history, product codes, chargeback data, and decision reason codes, as well as all third party data, like identity verification data and device information. Third party data is especially important on Black Friday since most transactions come from irregular, or new, customers without detailed purchase history. The data is only as useful as the predictions it can provide, however. Sufficient analytics resources turn data into intelligence, providing insights on how your customers’ behaviour and fraud patterns change during the holiday season. Consider the data a window into differentiating good customers from fraudsters.

Lastly, to make use of this new intelligence, a flexible and efficient decision workflow is necessary. Since holiday transaction volume can rise more quickly than hiring and training review agents, automation is extremely important. Fraud professionals will need to frequently adjust score thresholds or other rules as traffic volume changes. The ability to perform fraud checks pre-authorization is also strongly recommended to streamline your process and save time and money.

What solutions can help?

Ekata’s Transaction Risk API is designed for the problems holiday traffic presents. The API’s sub-100-millisecond response time allows global identity verification data to be available, even including pre-authorization. This solution is highly scalable and serves the highest holiday traffic peaks seamlessly, all while returning rich predictive data signals for name, email, phone, ip address, and physical address, in a clean and easy-to-use format.

Transaction Risk API allows you to understand the identity fraud risk of every transaction that comes in, anywhere in the world, pre-auth or post-auth, in rules or in models, so that you can optimize customer experience while keeping fraud in check.

Ekata enables merchants to leverage new insights around customers without having to add additional steps to the checkout process. This is an ideal path for optimizing the customer experience and maximizing the holiday potential.

Time to get started

No matter where you are in the balancing process, it is important to take a first step before Black Friday begins. First, examine the robustness and scalability of your systems, next, ensure you have sufficient analytics resources to turn data into intelligence, and ultimately create a flexible and efficient decision workflow to save time and money. Preparing now means loyal customers and fraud prevention for holidays to come.

About Trenton Spratling

Trenton Spratling is a Risk Solutions Manager at Ekata in North America. He assists merchants and payment companies seeking to enhance their fraud strategies by identifying relevant identity data from Ekatas Global APIs.

About Ekata

Ekata provides global identity verification via enterprise-grade APIs and a SaaS solution. Our product suite is powered by Ekata Identity Engine, the first and only cross-border identity engine of its kind. It uses complex machine learning algorithms across the five consumer attributes of email, phone, name, physical address, and IP to derive unique data links and features from billions of real-time transactions within our customer network and the globally sourced data of our graph. Businesses around the world including Alipay, Stripe, Airbnb, and Microsoft use our solutions to approve more good transactions, reduce friction, and find fraud.