Fraud costs in many different ways: the actual cost of losses (which are much bigger than most realise) plus the huge cost of closing off opportunities to grow the business.
A joint webinar by BlueSnap, a global e-commerce payment company, and Kount, a leading fraud prevention software and services provider, highlighted the basic dyamics of fraud control:
- every $1 of fraud costs merchant $2.40, and eight good sales are required to recover fraud loss from one fraudulent desktop sale (12 sales to recover fraud loss of one mobile sale)
- fraud prevention at the point of sale requires multiple control techniques including card fingerprinting, zip code checking, order reviews, white and black list checking, AVS which are configurable for individual merchants.
The case studies showed the bottom line returns from improved fraud prevention:
- company that reduced chargebacks by 98% and eliminated chargeback fees and fines were able to:
- re-introduce e-cards as they became viable again
- expanded into 40 additional countries
- increased acceptance of payment systems from users
- an online merchant which had so much fraud they had to divert resources from sales and growth to fraud prevention, by introducing fraud control was able to :
- reduce chargebacks by 80%
- cut fees, fines and lost product costs by 95%
- sale increased 5% due to reduced declines and higher conversion rates
- expand into new countries.
- shift resources back to sales and marketing.
CTMfile take: Getting fraud under control not only cuts your costs, it really can open up new markets and geographies.
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