Your shopper spends his valuable time picking the items and adding them to his cart. Finally, he is excited about the online purchase he is about to make. All that is left to do is to enter the credit card details and click “Pay”. He has come all that way of the conversion funnel, but suddenly something goes wrong. The card gets declined and the payment doesn’t go through. The shopper ends up frustrated, carts abandoned, and the merchant loses the revenue and a customer who most likely never returns.
To an average consumer, completing an online purchase is a simple one-click action. Behind the scenes, however, there is a remarkably complex process that requires a series of aligned steps between the cardholder, merchant, and issuing bank.
The cards get declined a lot more often than merchants realize and the damage of payment failures puts them into a “rock and a hard place” situation, making them choose between effective payment fraud prevention, or lost checkout conversions due to strict security protocols. No matter if the payment failure occurred from the merchants or a customer’s end, it leads to irreversible consequences.
What are the possible reasons behind a transaction failure?
Soft transaction declines cause around 80% of payment drops and are usually temporary, yet super confusing as they might hold transactions in pending pre-authorization status for days or much longer. They occur for varied reasons including the need to authenticate the cardholder’s information further due to unusual behaviour or technical issues processing the payment.
Hard declines mean that the customer’s card-issuing bank rejects the payment. Examples include attempts to use an expired, lost or stolen card, invalid account information or a fraud attempt took place. In any case, the payment will not be retried.
While any kind of decline marks a red flag for merchants to validate payment and protect themselves from possible threats, it often turns into overprotective risks obsession and legitimate customer churn.
Multiple security and authentication steps, low tolerance rules, incompetent automatic measures and bulky obstacles might trigger an increase in false declines, leading to legitimate transactions rejections due to a suspicion of fraud.
What Is the real cost of fraud false positives?
According to ‘Black Boxes and Paradoxes’ research, the cost of false declines to merchants in the UK, US, France and Germany has been estimated at $20.3 billion annually. Of that, $7.6 billion was entirely written off. False-positive payment fraud costs 13 times more in lost income than actual fraud. The stats are shocking! Since it’s hard to measure false positives, most online merchants have no idea how much money and legitimate customers they actually lose. The results of such a high volume of false positives can be devastating for online businesses.
The good news is, FUGU’s AI post-payment security solutions contain several advantages over the rules-based fraud detection programs responsible for most of the false positives threats. Modern machine learning combined with a post-payment risk monitoring system enables merchants to accurately distinguish fraudulent from legitimate transactions in seconds. This method has become a weapon against fraud detection and an effective payment fraud prevention tool for all online sellers.
“Automating payment monitoring is great, but each transaction matters and it has to be revised the most accurate way”, Amir Sadras, the founder of FUGU mentioned. “While most payment security solutions force merchants to decline any suspicious transaction automatically, we rely on advanced technologies and monitoring tools to put an extra layer to post-payment background scoring and balance between fraud prevention and conversions increase for each of our customers.”
FUGU post-payment risk monitoring system is a game-changer in stopping fraudsters while allowing legitimate customers to shop unhindered.
FUGU’s advanced toolset is aimed at all available risks scoring between the transaction and the actual product shipment to perform sufficient background information checks and predict all possible fraud scenarios. FUGU successfully identifies friendly fraud for a specific period from each payment request individually. It might be surprising, but this is the only solution existing today that prevents possible risks and all gives a go-to “payment-go-through legitimate payments.
FUGUs prediction technologies allow a change in approach and adjust the payment security processes for e-commerce businesses to prevent payment fraud losses, maximize revenue, and keep their customers loyal and happy alike.
If you want to secure your payments, reduce risks, and increase conversions, GET IN TOUCH with our experts!
To download FUGU App please visit https://apps.shopify.com/fugu-sensing-post-payment-risk