Finding the sweet spot: Synergy between Conversion and Security

March 21, 2017
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Merchants who seek to maximise profits tend to concentrate on two aspects of increasing revenue – payment security and high conversion. In response, payment providers develop increasingly sophisticated anti-fraud technologies, simultaneously creating strategies for merchant clients to increase their conversion rates. International payment provider ECommPay shares its experience on how to find the perfect balance between these two variables.

What is the relationship between conversion and risk management?

In matters of increasing conversion, e-Commerce merchants have grown accustomed to relying on their payment service providers, expecting new, innovative tools and technologies on a regular basis.

Shopping baskets and payment pages, as the direct sales point, are critical in retaining consumers on the merchant’s website. Based on analyses of client sites, ECommPay conducted a series of studies to analyse the behaviour and motivations of consumers, as well as of the factors affecting them. As it turns out, certain elements contribute to developing a sense of consumer confidence, resulting in a higher conversion rate.

Convenience and functionality are important to consumers as they navigate the payment process. To meet these needs, payment providers offer a number of solutions. For example, recurring payments allow the merchant to withdraw payments at regular intervals for repeat purchases/services. Routing and cascading, another technology implemented by payment processing operators, redirects payments to various acquiring banks to ensure successful transactions. These tools streamline the payment process, meeting consumer expectations and increasing conversion.

In their quest to improve conversion rates, however, merchants should not neglect the security factor. A simplified payment system may inadvertently make electronic payments vulnerable to fraudulent activity. To minimise such risks, ECommPay recommends that e-Commerce merchants comply with international data protection standards and implement stringent anti-fraud measures.

How does high conversion affect security, and what constitutes the greatest risk?

There is a direct correlation between an introduction of conversion-oriented products and the level of electronic fraud a merchant experiences. Technologies designed to attract consumers with simplicity and ease-of-use are incredibly susceptible to fraud.

In addition to losing credibility within the market, businesses affected by fraud can suffer serious financial losses. Merchants are not only responsible for all transactions carried out without the protection of 3-D Secure, but are also subject to fines or sanctions from VISA and Mastercard for not meeting terms of use.

However, if a merchant implements 3-D Secure, a liability shift occurs, and the bank issuing the card used becomes responsible for any financial losses sustained.

Despite the temptation to turn off 3-D Secure to increase conversion by appealing to consumers unwilling to inconvenience themselves, merchants should be aware that this decision could prove costly.

3-D Secure should only be removed in cases when the merchant is fully aware of all the risks, but feels that the benefits outweigh the possibility of negative consequences. For clients willing to take this risk, ECommPay adjusts the filters of its proprietary anti-fraud system FraudStop to carefully monitor transactions and immediately take action against suspicious activity.

So is there really a sweet spot between conversion and security?

Prior to engaging in collaboration with a new client, payment solutions providers must carefully analyse the client industry and associated particularities in order to assess potential risks. Working closely with prospective clients, ECommPay creates individual anti-fraud strategies to account for geographic location of operations, transaction history, existing precedents of fraud management, user account restrictions, etc.

ECommPay’s risk management experts routinely examine the customer base of merchant clients to create special groups, determined based on the number of custom filters, including the position and history of the account. In addition to the standard “black” and “white” lists, ECommPay offers merchants the opportunity to assign various levels of protection to specific groups.

For new customers, ECommPay recommends using the highest level of anti-fraud settings, whereas loyal customers can enjoy a faster, more convenient payment process.

Engineering individual security and conversion solutions, taking into account industry sectors and business specifics, ECommPay’s team of payment professionals assist clients in finding equilibrium between technologies targeting conversion and retention and the security measures fighting fraudulent activity.

While innovation in the payments industry has led to the development of highly sophisticated payment technologies aimed at either increasing conversion or at improving security, merchants continue searching for the optimum balance between these two trends. Under the guidance of an experienced payment provider, willing to tailor individual solutions to the particulars of client industry, size, and audience, the desired results can be achieved.

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