Rules, regulations and red tape are often seen as the biggest barriers to business, whether starting or scaling. And it is no different when it comes to eCommerce.
Retailers of all sizes must be aware of the laws that impact them for their own protection as well as their customers. Whether PCI DSS or GDPR, regulations are a key factor for retailers to address, regardless of their size.
Retailers will soon face new legislative changes. From September, they will have to comply with Secure Customer Authentication (SCA) under the Second Payment Services Directive (PSD2). Brought in to tackle payment fraud in Card Not Present (CNP) transactions, retailers will have to verify purchases through two of three factors:
1- What the customer knows (PIN or password)
2 – What the customer has (the device they’re using)
3 – Who the customer is (facial recognition or fingerprint)
Some industry commentators believe SCA will create more problems for retailers, with more friction in the checkout process leading to a rise in card abandonment. Abiding by rules and regulations does not have to simply be about compliance, a box ticking exercise to ward off warnings and fines from regulators. The most savvy retailers identify regulations as something they can take advantage of, to make them work for the business.
For smaller retailers, working with payments experts presents the opportunity to establish and enhance trust between the business and its customers. Informing customers of the steps being taken helps to reassure them that everything is being done to keep their data, particularly sensitive data like card details, safe.
Although working with a payments expert allows retailers to comply with SCA in a way that reduces the impact on the customer experience as much as possible, greater openness engages the customer and encourages them that a little more friction is worth it for greater trust and security.
Although legislation such as the SCA are designed to help reduce fraud, it is almost impossible to completely eradicate it.
Retailers can work with their payment service providers and partners to help identify potential fraud before it happens. The most advanced technologies allows a provider to recognise and flag suspicious activities before fraudsters even get to the checkout. This is based on a series of rules-based alarms that stems from customer data. The more customer data a retailer holds, the more it can understand user behaviour and implement algorithms to detect fraudulent activity. Even when fraud does occur, retailers should actively work with their payments partner to restrict the impact it can have on both the business and the affected customer(s).
As retailers grow, they become a bigger target for fraudsters. Therefore, it is vital that small retailers address this issue before they start to scale, ensuring they are fully prepared for the future.
These insights are based upon Ingenico’s ‘Preparing for Christmas this Summer’ e-book. You can download the full e-book here.