By Rei Carvalho, CEO of Emailage.
Online payment fraud – also known as “Card Not Present” (CNP) fraud – is fast becoming a major problem for digital merchants across the globe. The latest projections suggest that, internationally, retailers stand to lose a staggering $130 billion to the issue.
However, it seems that far too many online retailers are not taking the issue seriously enough and, as a consequence, are failing to put the safeguards in place to protect their customers and their business from fraud.
More, it appears that SMB eTailers are the worst offenders. New research by Emailage, which questioned more than 1,000 small eTailers and other SMBs across the U.S. and Canada, has discovered that one in two (48.4%) small businesses think they are too small to be in the sights of fraudsters and other criminals. Two in five (38%) say fraud is not a big concern for their business, and 58 per cent believe their business isn’t as susceptible to online fraud as their larger competitors.
But, this complacency is unfounded and could have dire consequences for small eTailers and their customers. According to Emailage’s research, in the last 12 months, companies with fewer than 49 employees were hit particularly hard by fraud, reporting average losses of $37,258.14 each to criminal activity. Meanwhile, fraud losses reported by larger businesses in the U.S. averaged $26,640.40 and $14,673 in Canada.
With all of this in mind, it is clear that eTailers have a false sense of security, which could well mean they are gambling with their business profits and their consumers’ financial wellbeing.
The cost of complacency
So why are SMB merchants so apathetic when it comes to online payment fraud?
Simply, there is a false perception regarding “return on investment” (ROI) held by many small digital merchants, which leads them to neglect payment fraud on their channels. With this in mind, it is no wonder that, if a company hasn’t yet been targeted by criminals, they may not appreciate how damaging such crime can be for their business.
But, in failing to invest in effective preventative solutions small merchants may well be making themselves a target for unscrupulous fraudsters – a company that doesn’t have any security measures is far more attractive to crooks than one that has robust defensive systems.
A single attack can easily result in financial losses that dwarf the cost needed to implement a robust and reliable anti-fraud system. This is because the losses don’t just come from the money taken in the initial crime, they can come from the long-term reputational damage that can result from fraud. For SMBs that increasingly rely on word-of-mouth referrals and positive reviews, reputation is everything. Nowadays, instances of online fraud are much more visible to consumers and competitors alike as public awareness of fraud risks has grown. For many SMBs, it could take just one well-publicized breach to permanently tarnish a company’s standing. For others, such a breach would be a death sentence.
With this in mind, it is crucial that small merchants take the fraud threat seriously and invest in prevention solutions.
Prevention is better than cure
From all of this, it’s clear that many SMBs struggle to find the time and resources to equip themselves in the fight against fraud. But it’s also clear that fraud prevention should be a strategic investment for SMBs to guarantee the future growth and existence of the business.
As a result, collaboration with a reputable fraud prevention organization is key. Investing in a relationship with a third-party organization is a simple, cost-effective means of accessing technological solutions and expert guidance to help in the fight against fraud.
Third-party specialists can support in a wide range of areas relating to fraud prevention, including the implementation of effective and reliable “customer authentication”. This is a crucial first step in ensuring that the purchase is being made with the approval of the account holder by accurately verifying their identity.
A customer authentication solution that is becoming more and more widespread in North America is the use of customers’ email address data to confirm and verify identity.
Email is a unique global identifier which is already a basic requirement whenever a customer sets up or logs into a digital account. Every transaction we make online requires an email address but, until now, many companies have believed email addresses were only useful for customer notifications and marketing campaigns.
This is simply no longer true – an email address is capable of so much more and has the power to change the way fraud prevention is conducted for organisations across the globe.
A staggering 91 per cent of email users keep the same email address for at least three years, and 51 per cent keep the same email address for over 10 years. This represents a vast amount of data that can be analyzed and put to great use in the fight against online fraudsters.
Email risk assessment solutions, such as Emailage’s EmailRisk Score, harness multiple data points in real time to separate fraudsters from genuine customers without impacting on conversion rates or customer experience. As such, email risk assessment creates an effective, “zero-friction” first layer of fraud prevention, which enables merchants to distinguish genuine customers from fraudsters, so they can act to protect consumers and their business.
Fraudsters don’t discriminate
Fraud isn’t just a problem for retail giants – even the smallest eTailers are at risk. With this in mind, SMB owners need to invest now in robust customer authentication solutions.
By investing in effective and reliable technology, like email risk assessment, online merchants can protect themselves and their customers from fraud without the need for other complex and costly verification steps. In doing so, they can protect profit margins, boosting their business growth.
To find out more about why SMBs need to invest in fraud prevention, read Emailage’s report: Size doesn’t matter: Why fraud prevention is a strategic investment for SMBs.
Rei Carvalho Biography
Rei Carvalho is an experienced entrepreneur and the founder of Emailage. He is a computer scientist with more than 20 years of experience in data security, effective software creation and efficient management.
Rei established Emailage in 2012 after identifying that no other fraud prevention business was harnessing the power of email data to protect online consumers. In 2018, Emailage shared 5.5 million fraudulent emails and analysed 164 billion global transaction data points. This has results in the prevention of $2.8 billion of fraud globally.
AI: CUSTOMER FACING EMPLOYEES’ BEST FRIEND IN THE FINANCIAL SERVICES INDUSTRY
By Ryan Lester, Senior Director, Customer Experience Technologies at LogMeIn
We’ve all heard the old saying “money talks.” Well when it comes to customer loyalty and retention, good customer experience talks much louder, with 30% of customers leaving a brand and never returning due to a bad experience.
The truth is, there are a lot of companies with similar products and services, but that doesn’t mean that differentiation is impossible. So, what’s the solution? For financial services, large and small, customer experience is becoming the key competitive differentiator and the best way to deliver an impactful experience is to empower customer-facing employees to do their best work. Artificial intelligence (AI) is enabling these employees to create remarkably better customer experiences, resulting in customer loyalty, advocacy, and overall growth.
For financial institutions that have been considering new strategies for improving the quality and efficiency of their customer experience, here are a few ways AI can enable them to deliver the “human factor” that good customer experience demands whilst ensuring customer facing employees can provide a more positive experience for customers.
Increase employee productivity
How much of employees’ time is spent searching for answers to questions? Do they ever have to put customers on hold or even step away to get additional help? AI helps provide front-line employees real-time guidance so they can spend less time looking for information and more time solving problems. An AI-powered chatbot, for example, can be listening in the background of a conversation helping point employees to the right data, solutions, and processes to resolve customer issues faster than ever before.
Deliver a consistent customer experience
When banking customers engage with their financial institutions, they measure the speed and accuracy of the service through two criteria. First, how quickly can the system access their account and deliver the correct information? Is it faster than a human could type it in and share it? And second, if they eventually do need to be connected to a live customer support agent, is their information captured and passed along accurately? AI technology takes those general queries off the customer support team’s plate, providing a quick, accurate, and effective response. If a query needs a more in-depth response, AI can hand it off to support staff to address.
Not only this but leveraging a centralised, AI-powered knowledge solution ensures every employee has access to the same, updated information, so no matter who the customer speaks to, they can be assured that employee responses are both consistent and accurate across the board.
Accelerating employee training and onboarding
Like any industry, employee turnover is inevitable and can be costly. But, not training new employees correctly or in a timely manner could be much more costly. When it comes to financial services there is a lot to learn, whether it is something simple like the process for checking an account balance to all the nuances associated with mortgage loans. AI can support on-the-job training by helping new employees answer questions confidently, correctly, and much quicker than they could before.
Improving employee satisfaction
Today’s banking customer has all kinds of new ideas about their banking experience. “The Amazon Effect” has successfully raised consumer expectations to the extent that a consistent, personal, and relevant experience is the new normal. As a customer, how many times have you been told “I’m sorry, I don’t know the answer?” Customers want solutions to their problems and employees want to be able to deliver those solutions as efficiently and effectively as possible. AI assisting in the background helps minimise those negative moments – making employees job easier, less stressful, and overall more enjoyable.
Identify knowledge gaps
Do you know all the questions employees are getting asked? Do you know what’s easily answered and what’s not? Real-time insights allow knowledge managers to keep up to date on frequently asked questions and gaps in current resources. This allows them to strategically improve or add content where needed.
Augmenting customer service
Whether talking with an AI chatbot or a personable customer service team member, the modern banking customer has high expectations for convenience, speed, and security. Which means that the technology you choose to deploy and how you deploy it is now just as important as who you hire and how you train them.
Today’s AI solutions won’t replace customer service agents or get in the way of the human factors that drive the customer experience. On the contrary, they augment it, allowing the business to do more without adding human resources. The higher the quality of a AI chatbot solution, the better it will be at taking the routine requests off the plate of customer service agents—giving them more time to provide a personalized and positive experience for customers.
TIPS TO PROTECT YOUR CASHFLOW DURING THE COVID-19 PANDEMIC
By Rita Cool, Certified Financial Planner at Alexander Forbes Financial Planning Consultants
The full impact of the COVID-19 pandemic is as yet unknown, but individuals have already begun to have their lives disrupted by the country’s economic shutdown, with retrenchments, salary cuts and forced unpaid leave making them take stock of their financial position.
The basic principles of financial planning are especially relevant at this time, but in the short term, cash flow is more important to many people.
To help safeguard you and your family’s financial security, here are some tips to follow to make sure you’re making your money work hard for you:
- Draw up a budget – this is especially relevant if you’re worried about possible retrenchment of yourself or your partner. This will help you know how much you need to cover your basic living expenses and where you can save money. Don’t only look at what you need to spend money on, but also when you think you will need that money. Perhaps you paid school fees upfront at the beginning of the year, or your car registration is only due again next year.
- Check your bank fees. Are you in the best structure for your needs? Are you paying for services that you never use? Consider moving banks to get a better deal.
- Banks have waived the Saswitch fee payable for withdrawing cash at another ATM other than your own bank, but if you’re doing this, be aware of when this switches back as you can end up paying almost double the bank fees.
- Did you know that you start paying interest immediately if you draw cash from a credit card and that you do not get three or six months’ interest free?
- Go through your house while you have extra time and identify potential items which you could sell, as this will free up cash.
- Where possible, pay cash for items as the interest rate on hire purchase items is very high and you pay around 20% more for those items than the sticker price. If you cannot afford the item and you don’t need it right now, wait.
- Look around for bargains online rather than driving around. There are some good sales on, and you can support businesses that need your help.
- At the same time, be aware of spending extra cash you could be saving towards your financial safety net. There are lots of deals available, so balance the need for the 70% off bikini or new laptop with being cautious about the future.
- Use store coupons and discount vouchers. The main food retailers have loyalty programme structures that can be tailored to your specific spending patterns. Make sure you claim point or vouchers but look out for monthly costs to belong to a rewards program. Ask yourself if your monthly savings validate the cost. Optimally a reward scheme shouldn’t cost you money.
- Check with your insurance company if your premium can be reduced because you’re driving less during lockdown.
- Check your current insurances. Do an insurance rebroke. Make sure you are covered for what you need and take things off the list that you do not have any more and add what you have bought since the last update. Make sure you are not under or over insured and that your premium is market related. The cheapest premium isn’t always the best so be aware of exclusions and excesses and make sure you can afford the excess if you need to claim.
- In most cases you can reduce your monthly insurance premiums by not having a cash pay-out in the future. If you want a pay-out, save the extra premium in an investment product, not a risk product.
- Be wary of consolidating debt. You might pay a lower interest rate but it might well be over a longer period so the total interest paid will be higher. If you have debt issues, set up a debt plan with dates and goals to reduce the debt little by little. Do not give up.
- Be aware that payment holidays are not a free loan, you still owe the money and you’re paying interest on it. Check with your service provider.
Remember that the pandemic will pass. Try not to panic as this may lead to rash financial decisions, which could have an impact on your finances later down the line.
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