Commentary

Ecommerce Efforts Derailed By Antiquated Ordering Systems

Many ecommerce systems don't work properly, making online commerce challenging for consumers. It also puts a burden on retailers and brands. The number of transaction "Card Not Present" declines stands at around 15%. In the U.S. this works out to approximately $40 billion in declined sales annually.

Some transactions are blocked for various valid reasons. Nearly 3%, or $1.2 billion, are blocked due to invalid reasons. That 3% becomes costly, especially during the holiday season, per a recent study which analyzed the relationship between omnichannel retailing, fraud prevention, and the holiday shopping season. The survey was conducted by 41st Parameter, an Experian company.

The company surveyed 250 marketers and found that few understand the benefits of fraud-prevention systems. Some 60% were unsure how much fraud costs their organization.

Interestingly, many businesses relax fraud detection measures during high peak times like the holidays, because they don't have the tools to manually review potentially risky orders during the higher-volume holiday shopping period, admits David Britton, VP of industry solutions at 41st Parameter.

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The survey shows companies want to learn ways to not inconvenience good customers by declining legitimate transactions, especially after increasing budgets around the holidays to attract existing and new customers. Solutions that are not time-consuming or cumbersome, compromise consumer privacy. or depend on merchants sharing proprietary information could be helpful.

One of the major problems in online transactions remains hackers. The survey shows 40% of marketers admit their organization had been targeted by hackers or cybercriminals. Some 35% said they would increase their digital spend to prevent fraud during the 2014 holiday season.

It turns out few marketers understand the impact of declining transactions because of suspected fraud. About 70% of marketers at small businesses say they are unsure of the impact. Half of marketers at mid-sized business and 67% of large-enterprise marketers are unsure of the impact of fraud, as well.

Aside from Experian, other companies are working to mitigate fraud. Many sites have adopted the secure version of HTTPS, but Google wants to warn people their data is at risk each time they visit a Web site that does not use the basic Web protocol. This would help prevent fraud, not just during the holidays, but always.

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