Consumers continue to shop online more than ever seven months into the global COVID-19 pandemic. A recent study found that new customer accounts now account for 30% of all online transactions, for example, five times more than before the crisis. This growth is a double-edged sword for merchants as they must keep up with changing consumer payment expectations online and in-store while protecting their data from an increasing number of fraudulent attacks.
Cybercriminals have been emboldened by the ongoing pandemic, using a variety of old and new techniques to skim money and personal data from vulnerable online platforms or legacy systems. Credit card fraud and identity theft volumes both inflated in recent months, and fraudsters have also targeted in-store pickup, driving fraud attempts up 55%, according to a report. Merchants must therefore act quickly to protect payment details as consumers move their business online, explained well marrieddigital director of a furniture and home goods retailer Herman Miller.
“Our products are highly regarded purchases and often involve top-notch customer service, so that may not be a challenge for us. [as for] a retailer with a large cash-and-carry business, but as our digital business has grown we have remained focused on fraud prevention,” Groom said in a recent PYMNTS interview.
Failing to properly secure consumer online payments can have costly consequences for merchants who are also trying to meet the need for a greater variety of payments. Herman Miller uses automated tools to do this, Groom continued, because they allow the retailer to respond flexibly and quickly to potential fraud — and help legitimate consumers complete transactions more easily.
Changing Payment Behaviors and Fraud
Fraudsters, like merchants, track where consumers lead, which means fraud prevention tactics have always changed for banks, payment providers and retailers. How, where and why consumers transact has changed rapidly during the pandemic due to health and economic concerns, and online payments have claimed a greater role in commerce.
The pandemic-induced jump in online shopping may actually mask the growing threat of fraud for retailers, however, according to a recent report. The influx of new users online can make fraudulent attacks appear to be decreasing, in part because this explosion of new users can also lead to an increase in false denials. According to the report, retailers are five to seven times more likely to mislabel transactions as fake when they involve new customers rather than repeat customers. Retailer fraud protection strategies therefore need to be nimble enough to squeeze out real fraudsters while leaving legitimate new customer purchases undisturbed, a balance Herman Miller seeks to achieve with automation, Groom said.
“Automated monitoring and third-party tools in this area have made great strides in recent years, so we’re trying to leverage a combination of several different automations with the support of an in-house team that makes sure we’re up to speed. update on best practices in fraud prevention,” he said.
Using automated technologies that can create this necessary barrier against fraud also means that retailers can focus more on meeting consumers’ changing payment needs. Herman Miller recently relaunched its online furniture retailer site Design at your fingertips (DWR), for example, with support for more traditional credit and debit payments as well as the implementation of buy now, pay later (BNPL) tiered payment plans.
“We’ve always offered our customers the ability to purchase with a variety of payment methods, but our strategy over the past year has evolved to place even greater emphasis on this,” Groom said. “We continually re-evaluate the payment options available to us based on customer data and research. For example, in the customer journey work we did prior to our latest DWR.com redesign, we found that our customers wanted fewer payment options than we originally anticipated, and we simplified our roadmap based on those learnings.
Fraud protection is essential to meet these changing needs, both to prevent legitimate customers from being frustrated and to protect their payment information. Meeting consumer payment demands will likely become more important for competing merchants as the long-term effects of the pandemic ripple through how consumers work, shop or find entertainment.
Payments and the future of retail
Consumers are not only changing the way they pay, they are also making new choices about what they buy and why. The average consumer is spending more time at home, for example, even as physical stores tentatively reopen, a trend that is likely to have a significant impact on retail as well as social trends for years to come. .
“The pandemic has not only brought about a major shift in consumer shopping behaviors – how and what we buy online – but has also created new demands for multifunctional spaces,” Groom said. “With working from home and distance learning a new normal, our homes have to work harder than ever.”
Retailers will need to adapt quickly to these large-scale changes if they want to retain consumer loyalty. Leveraging automated technologies to guard against fraudsters who are also trying to adapt to this new business normal can be the first step to ensuring that merchants can stay in the good books of consumers.