It’s no secret that the easiest way to increase conversion can just as easily open the floodgates to never-ending fraudulent transactions, but let’s break this down a bit further: what exactly is conversion, why is it important, what is the relationship between acquirers and operators in achieving equilibrium between conversion and security, and what kind of payment technologies can be utilised in pursuit of this goal?
Conversion typically refers to the percentage of an end-user’s attempts at completing a transaction that results in a successful payment.
Historically, there have been multiple different methods and principles used for calculating this percentage – mostly dependent on whether the analyst responsible for doing the calculations works for the merchant or for the acquirer.
After all, whose primary responsibility is it to maintain optimal conversion rates? Merchants have a vested interest in shifting blame to acquirers in cases of poor performance, as this is likely to result in lower operational costs, while the acquirer will doubtless argue that there are a number of external factors beyond its sphere of influence. For example, when a player is unable to place a bet due to a lack of funds on his account, who is at fault?
The Battle for Technological Dominance
Long gone are the days in which the partnership between operator and acquirer relied on the simple transactional service of the latter facilitating the acceptance of payments and the subsequent processing of transactions. As the market has grown saturated, payment service providers have been drawn into an ongoing battle for technological dominance, engineering innovative products and features to meet client requirements.
This competition relies on various success metrics: onboarding costs, processing rates, percent of successfully contested chargebacks, amount of fraud avoided or negated, etc. The ultimate indicator, however, will always be the conversion rate. Ultimately, conversion depends on the end-user: is the operator’s website and payment process optimised for user experience and capable of providing a wholesome customer journey, thereby convincing the consumer to follow through with their intention to make a payment?
When it comes to doing business online, combining convenience and functionality is key. Consumers, regardless of whether they’re retail shoppers or sports enthusiasts placing a bet on that day’s football match, demand a streamlined, intuitive user experience. To meet these needs, and to keep those same customers coming back again and again for more purchases, merchants must optimise the payment process.
The Importance of Checkout
Ultimately, the make-or-break moment comes at the checkout stage. As the point of sale, the shopping basket and the subsequent payment page is critical in retaining and converting customers. Engaging in big data analytics, or the analysis of the consumer data from hundreds of millions of transactions coming in from multiple clients across multiple verticals, payment service providers or acquirers can identify the factors affecting consumer behaviour and ensure the customer journey meets their expectations.
End-users – players, in this instance – tend to prioritise simplicity, so conversion rates can be expected to go up in response to weakened security measures, which in of themselves are often inconvenient and time-consuming. That being said, the associated costs, such as the fines levied by international payment systems when fraud thresholds are exceeded or the ensuing reputational damage, are likely to outweigh the financial benefits.
So with this in mind, what’s the best way for operators to achieve equilibrium between two seemingly opposing extremes, i.e. improve conversion without sacrificing security? In undertaking big data analysis, acquirers can isolate industry-specific trends, proposing solutions and advising their clients on best practice.
The Danger of Foregoing Security Features
One of the most common conversion-boosting tactics involves removing 3D Secure, which is an additional layer of security offered by international payment systems Visa and Mastercard. As the functionality redirects consumers to another page and requires them to enter additional card details, this is the stage at which a significant portion of traffic may be lost.
By removing the 3D Secure feature, operators hope to reclaim that traffic, but run the risk of attracting much higher levels of fraudulent transactions as removing security layers leaves them considerably more susceptible to targeted cybercrime. Removal of the 3D Secure feature is therefore ill-advised without a strong risk management system in place to pick up the slack.
Operators can and should partner with acquirers capable of providing the aforementioned strong risk management, preferably an in-house solution which they can offer clients in conjunction with smart routing capabilities. Smart routing applies artificial intelligence to analyse the variables of incoming transactions, dynamically routing them to the merchant identification number (MID) most likely to result in a successful payment.
Taking into consideration each of these transaction variables, which include, but are not limited to, currency, country of issue, transaction amount, and payment method, risk management systems are capable of calculating the likelihood of fraudulent activity, which they can then communicate to the smart routing technology in order to send the transaction to either a 3D Secure MID or a non-3D Secure MID.
This dynamic analysis on the part of both risk management system and smart routing works to ensure that customers who have previously demonstrated their trustworthiness and reliability are rewarded with a simplified payment journey, while potentially fraudulent behaviour is thoroughly reviewed and, if deemed necessary, blocked.
In Pursuit of Progress
Ongoing innovation in the payments sector, motivated by the industry’s increasingly competitive environment, has resulted in the introduction of highly sophisticated risk management solutions, advanced payment products, and an assortment of clever features, all geared – either individually or cumulatively – at improving conversion rates or safeguarding payment security.
As operators continue their pursuit of equilibrium between these two crucial aspects of their business, payment service providers and acquirers meet client demand by engineering proprietary technologies and developing tailored payment strategies to address these opposing elements and establish synergy between them, helping business owners achieve their ultimate goal: increased revenues.