All online merchants are responsible for their customers’ security. Preventing hacking or scamming attempts on eCommerce stores is a part of this responsibility. Yet, every year, thousands of online merchants and shoppers are the victim of these fraudulent attacks.
The money lost by vendors and consumers amounts to billions every year. In most instances, online merchants bear the brunt of the fraudulent purchases. Luckily, these merchants can now protect themselves using efficient eCommerce fraud prevention software.
Understanding the eCommerce Fraud Prevention Software Market
The eCommerce Fraud Prevention software market (also known as the FDP market) is one of the world’s most profitable industries.
In 2017, the global eCommerce FDP market was only worth $19.5 billion. By 2023, it’s expected to reach a valuation of $63 billion. That’s a 223% increase in market size.
This rapid increase is understandable because instances of online scams and eCommerce fraud also increase every year. With mobile shopping becoming so popular, eCommerce vendors have to update their security measures every month.
The best eCommerce fraud prevention tools are specifically designed to deal with all forms of eCommerce scams. Plus, the developers update these tools as per the behavior of the scammers.
For instance, identity theft has been the main threat for online shoppers and vendors for the last few years. Hence, the demand for identity theft-detection tools is at an all-time high. Since these tools are updateable, fraudsters are forced to evolve at greater speeds. These tools make sure that their clients’ anti-fraud strategies are efficient, up to date, and offer real-time solutions. A simple feature like instant user authentication can do wonders for an eCommerce vendor.
In addition to boosting security, these eCommerce fraud prevention tools also ensure frictionless customer experiences. Modern-day online shoppers aren’t too keen when it comes to waiting for transaction processing. Too much friction in the payment gateway pages leads to cart abandonment and losses for the vendor.
But, on what basis should online merchants choose eCommerce fraud prevention tools? There are many such software tools in the market. The best ones offer these features –
ML-based eCommerce Fraud Prevention Software
Vendors should look for eCommerce fraud prevention tools that incorporate Machine Learning (ML) algorithms.
These algorithms give online vendors improved authentication capabilities. The fraud prevention software makes real-time decisions so that real customers’ experience in the eCommerce store isn’t affected. ML algorithms improve with each fraud attempt, boosting a vendor’s fraud screening capabilities. Plus, these software tools can be customized to fit a merchant’s payment or business strategies.
If even one aspect of the transaction reveals suspicious activity, the fraud prevention software automatically denies the payment request. Vendors receive automatic alerts. Overall, ML-driven eCommerce fraud prevention tools are more efficient than standard tools because –
- Real-time transaction screening – Vendors get instant reports on fraud attempts.
- Behavior analysis – Automated review system constantly assesses all incoming user-related data. Plus, ML-powered systems learn from each transaction. They whitelist repeat customers and sport emerging fraud patterns amongst fake orders. At the end of each financial cycle, month, or even week, online vendors gain a better understanding of the links between suspicious user behavior and fraud attempts.
- Manual Screening is Tedious – Businesses don’t have to invest in manual screening. Manual screening is extremely expensive. Businesses that opt for manual screening have to employ large teams of security experts dedicated to assessing each transaction. ML-powered eCommerce fraud prevention tools eliminate these expenses.
- Cost-Efficient – In a recent survey, businesses that used manual reviews found 89% of orders to be legitimate. That means security experts spent a lot of time and effort on screening real orders. Manual screening also negatively impacts customer experiences. ML-powered fraud detection is cheaper, just as efficient, and involves less hassle.
Fraud and cybersecurity risks evolve with time. eCommerce fraud prevention tools tailored to deal with specific fraud threats are not efficient and become outdated within months. The fraud prevention software should routinely absorb trends, patterns, etc. from data to detect newer types of cyber threats.
The eCommerce fraud prevention tools must also account for government-mandated compliance requirements. For instance, online vendors who accept card payments from customers in Europe need to be PSD2-compliant. EU’s Payment Services Directive mandates online vendors, third party payment providers, and financial institutions to take strict steps that boost eCommerce security.
Vendors should opt for eCommerce fraud prevention tools that are available at flexible prices. Not every online vendor records high amounts of annual sales. So, the costs must be in accordance with the vendor’s financial capacities. Thankfully, ML-driven eCommerce fraud prevention tools are much less expensive than manual screening options.
As the digital economy and eCommerce platforms grow, so will the threats of cyber fraud. Without eCommerce fraud detection and prevention tools, vendors will not be able to provide high-quality customer service.