eCommerce News Australia logo
The latest digital commerce news for Aussie businesses
Story image

Is fraud prevention costing eCommerce more than fraud itself?

By Contributor
Wed 12 May 2021
FYI, this story is more than a year old

Article by Forter vice president of sales for APAC Monica Acree.

In these turbulent COVID-19 times, eCommerce companies have faced both famine and feast as they adapted to the restrictions and opportunities created by COVID-19. 

Research shows that in the past 12 months, the number of first-time online shoppers has doubled. However, while these new users represent a significant opportunity, many businesses are missing out because they’re simply not able to tell whether these potential customers are legitimate or not with their existing fraud prevention technology. 

As a result, new users to eCommerce businesses are far more likely to be declined at the point of transaction, leading to the immediate loss of this revenue — and in many cases, these customers never return, meaning longer-term loss of lifetime value. 

This phenomenon is called New User: Missed Opportunity (NUMO), and it costs retailers a fortune. The longer-term loss of revenue could easily be more than the cost of the occasional fraud loss that an eCommerce business’s existing fraud prevention solution is preventing.

So how does NUMO happen, and how can eCommerce companies change how they approach fraud prevention technology?

The missing millions — the scale and frequency of NUMO

A customer’s first experience of purchasing online is critical. The process needs to be as welcoming, easy and frictionless as possible. When a customer has decided to try out a new supplier and gone to the trouble of selecting their item and entering their personal details, the last thing they want is for that effort to go to waste if the order is declined. 

The damage that this causes is highlighted by recent research from Forter that found that 40% of those declined customers will take their business elsewhere and are unlikely to return. The opportunity to build a long-term relationship with that customer is lost forever. In their bid to stop fraud, some eCommerce businesses are forgoing revenue, and the numbers suggest that they are losing out financially — especially when taking into account the lost repeat business from lost new customers.

Why are new users being declined?

So why are these new customers being turned away instead of being welcomed with open arms? The answer lies in the limitations of legacy fraud prevention tools that struggle to make robust decisions about a user’s authenticity when presented with limited data. In an ideal world, the data within a fraud prevention tool includes what customers have bought in the past, linking online and in-store transactions, how often coupons are used and the frequency of product returns. This is all in the name of establishing the customer’s integrity. 

Unfortunately, many fraud prevention tools are based on manual reviews and rules, and these provide limited visibility of the wider eCommerce ecosystem. There isn’t enough information to establish the authenticity of the customer — the reviews and tools are not dynamic enough to keep up with the increased volume or changing behaviour — and this results in false declines and frustrated customers.

Of course, trust is a two-way street. It is not only the merchant that can have suspicions about authenticity. Customers, especially first-time online shoppers, can be nervous when providing a lot of personal information to a site and can abandon their purchase when pressed for extra details. 

Recent research by Baymard in the UK found that 24% of customers abandoned their carts because the merchant wanted them to create a customer account, while 18% did so because the checkout process was too long or complicated. 17% decided they didn’t trust the site with their payment information.

So, while the merchant aims to qualify the customer by getting the information to satisfy anti-fraud tools, the customer is being dissuaded from continuing. This extra friction contributes to NUMO. 

How technology can address this problem

eCommerce businesses must address fraud. There’s no arguing that. But if the tools they’re using are actually compromising genuine customer relationships, they’re contributing to potential losses that are even greater than the fraud itself.

How can technology address this? The key is accessing that all-important behavioural data that gives the eCommerce business confidence in the integrity of the customer without adding friction. By investing in advanced tools that access massive datasets across enterprises, banks, payment providers and industries, merchants get a better picture of what ‘good’ customers look like, meaning fewer are declined. 

Related stories
Top stories
Story image
Record number of Australians shopped online over last year
Pattern has released new research showing that in the last twelve months, a record number of Australians made a purchase online, spending AUD $62.3 billion.
Story image
Lenovo launches CO2 Offset Service for SMBs across A/NZ
Lenovo has announced the rollout of a new, first-of-its-kind CO2 Offset Service for SMBs across Australia and New Zealand. 
Story image
Gartner Magic Quadrant
Spryker named Gartner Visionary in 2022 Magic Quadrant for Digital Commerce
Spyker has announced it has been recognised by Gartner as a Visionary in the 2022 Magic Quadrant for Digital Commerce.
Story image
Exclusive: Koinly makes it easy to invest in the crypto market
Koinly is a cryptocurrency tax software platform and crypto portfolio tracker used by hundreds of thousands of crypto investors and accountants globally.
Story image
AU retailers rate their states for doing business
Retailers are optimistic about economic conditions and potential for business success in their own states, despite the current economic climate. 
Story image
Data protection: How SMEs can secure online consumers’ trust
Consumers believe how a company treats their data reflects how they treat their customers, according to a new survey.
Story image
Online shoppers leaving cart because of high shipping costs - report
New research commissioned by HUBBED reveals 90% of online shoppers abandoned a cart due to high shipping costs, and 64% say the lack of security was a purchase deterrent.
Story image
9 in 10 retailers prepared for economic challenges this year
Some 9 in 10 retailers (86%) are prepared for continued inflation, higher interest rates and potentially lower consumer spending, according to new research.
Story image
eCommerce fraud increasing pressure on businesses margins
It is vital for businesses to maximise the value of every dollar by turning away as many fraudulent actors as possible without blocking good customers."
Story image
Fintech software allows employees to access wages before payday
Paytime is a tech platform that plugs into payroll software allowing employees to access a portion of their earned pay before payday.
Story image
Infobip’s SMS and WhatsApp services are now available through Microsoft
Infobip has integrated its WhatsApp and SMS channels through Microsoft Dynamics 365 Sales and Microsoft Dynamics 365 Marketing.
Story image
1 in 3 SMEs say they wont survive 6 months into a recession
34% of Aussie SMEs would not survive more than 6 months of economic downturn, with 14% unable to survive a recession at all.  
Story image
Artificial Intelligence
Oracle unveils AI-powered application to automate sales
Oracle has unveiled the next generation of Fusion Sales, an application that automates sales and identifies the opportunities worth pursuing.
Story image
Eightcap to use BlackLine system to support financial close
Global CFD Eightcap is using BlackLine's recently launched Modern Accounting Playbook (MAP) to support financial close.
Story image
Consumers will stop doing business over data practices
“Data privacy remains a concern for consumers when it comes to sharing their information with an online retailer with an unclear view of privacy laws."
Story image
Australia's technology jobs boom continues - report
Australian tech job numbers continue to grow, with over 1.2 million people expected to be working in the sector by 2027.
Story image
Customer experience
BillingPlatform introduces new enhancements to revenue management services
Some of the new developments include hosted payment pages, and new and updated connectors to Salesforce, NetSuite, OneSource, Avalara and other enterprise systems.
Story image
Workday completes IRAP and gains FedRAMP authorisation
Workday has completed the Information Security Registered Assessors Program (IRAP) assessment at the Protected level, allowing its customers to process data in compliance with IRAP guidelines.
Story image
Forter and ShopBack enhance partnership to further prevent fraud
Forter and ShopBack have enhanced their partnership with the addition of better eCommerce security solutions for customers.
Story image
Akamai research finds PayPal security measures utilised in new phishing scam
New research from Akamai has found that a new threat actor is parasitising benign WordPress sites to execute an extensive PayPal phishing scam.
Story image
SC Ventures launches fintech startup for retail banking
SC Ventures has launched Appro, a fintech startup, to simplify the retail banking user journey, aiming to foster greater efficiency in application processes for retail banking products.
Story image
OpenText launches new solutions on Salesforce AppExchange
Included in this latest launch is OpenText Core Content, a Content Services platform that customers can leverage to effectively manage their content.
Story image
Google Cloud
Google Cloud achieves certified strategic status in Australia
Google Cloud says it has reached certified strategic status for cloud services under the Australian Government's Hosting Certification Framework.
Story image
Visa launches Eco Benefits solutions in Australia and NZ
Eco Benefits is a suite of sustainability-focused solutions that will help Visa cardholders better understand the environmental impact of their payments.
Story image
KICKS CREW selects Forter to help scale global eCommerce operations
KICKS CREW has selected Forter to help scale its global digital commerce operations.
Story image
SAS is a leader in anti-money laundering - Forrester
The latest Forrester report revealed that SAS received the highest score in the anti-money laundering category of 15 vendors.
Story image
Freshworks integrates with Google's Business Messages
"The integration with Freshworks makes it fast and easy for businesses to have conversations with their customers within the Google apps."
Story image
Remote Working
Sana Commerce builds online ordering portal for Food & Dairy Co
B2B eCommerce platform Sana Commerce says Sydney wholesaler Food & Dairy Co has gone live with its ERP integrated ordering portal.
Story image
Koinly, Cointree announce crypto tax partnership
"As the cryptocurrency space continues to rapidly grow in Australia, this partnership cements their commitment to crypto investors financial literacy."
Story image
Comedy legend Jimeoin fronts Epson advertising campaign in NZ and Australia
According to Epson the company’s EcoTank models now account for 74% of all printers sold in the category in New Zealand, alone.
Story image
Artificial Intelligence
Cyara rolls out comprehensive, automated chatbot feature
Cyara has unveiled new chatbot testing features with the latest release of Cyara Botium, creating a solution for comprehensive, automated chatbot testing and assurance.
Story image
Forrester names Pega a Leader in CRM Solutions 2022 report
Forrester Research has named Pega a Leader among 11 competitors in The Forrester Wave: Core CRM Solutions, Q3 2022 report.
Story image
Enterprise Resource Planning / ERP
Exclusive: SYSPRO on how ERP plays a role in Australia's manufacturing investment plan
While there is a significant drive for change, it's really down to execution, and businesses need to be prepared to find the right strategies for them to make full use of the government support.
Story image
Digital Transformation
Common challenges in the evolving digital world, and how to overcome them
Five technology challenges that will help highlight potential pain points and suggest how to circumvent or overcome them on the path to a smooth digital transformation.
Story image
Big business in cryptocurrencies and cybercrime
As of June this year, about a quarter (26%) of Australians considered cryptocurrency as a good investment, and over 36% have at one point considered buying cryptocurrency as an investment.
Story image
Customer experience
Exclusive: How Accenture is changing the customer experience game
Creating highly personalised real-world customer experiences using API, near-field communication, and spatial technology is about taking a traditional experience and elevating the customer journey into a digital world.
Story image
Exclusive: Marmalade empowers businesses to take control of their cash flow
Marmalade has been making waves in the invoicing space across Australia with its world-first invoice payments platform.
Story image
Small Business / SMB
Business Australia unveils new identity after rebranding
Business Australia has rebranded to My Business with a new logo, brand positioning campaign and visual identity culminating in an online platform.
Story image
Airwallex launches an online payments app on Shopify
Airwallex has launched an online payments app on Shopify, allowing merchants to integrate a gateway plugin on their online store to accept payments from their global customers.
Story image
Sitecore caters to modern marketing teams with CMS cloud launch
"Sitecore's move towards a composable SaaS offering for creating and delivering digital experiences is in line with what marketing teams are looking for.”
Story image
Social Media
ActiveCampaign reveals consumers seek trusthworthy content
Consumers will engage with new brands across all channels, including online, in-store and social media, as long as the content is relevant and trustworthy.
Story image
Tablets & laptops
Chromebook and tablet shipments see another rapid decline for the year
According to research from Canalys PC Analysis, Chromebook and tablet shipments have fallen for the fourth quarter in a row for Q2 of 2022.