E-retailers are on the cybercrime frontline and must evolve to stay ahead

It’s easy to forget that the internet is still in its “Wild West” era, where the frequency, complexity and devastation wreaked by fraudsters is only worsening with time.

As the entry point for most online transactions, retailers are on the frontline of the battle against cybercrime and destined to interact with malicious actors.   

To tackle these criminal entities, retailers need to beef up their security. The problem is, while more stringent verification and authentication procedures may help weed out fraudsters, they also impact good, honest customers who’ve simply come to shop.

A good analogy for this is comparing the retail experience with the experience at an airport. By adding further checkpoints throughout the customer experience, retailers are extending the queue to gain access to their services, like the multiple checkpoints at an airport to get through security – it’s not an experience you want to repeat.

But in an age where customer choice is infinite and patience is scarce, it’s risky to compromise customer experience, even at the cost of better security. Because these days, a frustrated customer is a lost customer.

So the question is, how can retailers beef up security without turning away current and future customers?

Thankfully advances in digital technology are enabling a different breed of security better suited to a digital world, that doesn’t impact user experience but instead, elevates it. However, online retailers need to ensure they’re digitally mature enough to adapt to this technology.  

So, online retailers who want to keep their customers, operations and reputation as secure as possible, while also adding to the user journey experience, will need to first embark on a transformation journey of their own.

And that starts by rethinking their authentication process from the ground up.

An accelerated landscape

The future of online retail has never looked brighter. The crisis of 2020 pushed a lot of reticent and resistant shoppers online for the first time, while deeply reinforcing those habits in pre-existent digital consumers.

As a result, the e-commerce world has never been more mainstream, with customers of every demographic now opting for the speed and convenience of online channels over physical ones. For instance, digital subscriptions have fast become the preferred choice for most customers, and businesses with this model, with research from Zuora finding that the subscription economy has grown 435% in the last 9 years.  

So, it’s no surprise that 61% of consumers say that they’ll continue spending more online on an ongoing basis, according to a 2020 report. And that is projected to continue, with the rise in global e-commerce sales set to last four to six years.

However, with more opportunity comes more risk, and increasingly, the shining star of this golden era in e-commerce is being blotted out by the growing menace of cybercrime. And with cyber-attacks becoming more common and complex, businesses are at risk of everything from reputational damage to the loss of customers.

Because malicious actors are now using the same authentication mechanisms retailers use to verify customers in their schemes, for example one time passcodes (OTPs), scams such as account takeover (ATO) – when cyber-criminals pose as a customer to gain control of their account – are also becoming more common.

And while there may not be a panacea to a problem this large, it’s still possible for retailers to make these kinds of attacks a lot more difficult for fraudsters.

A mature pathway

The urgency for solutions that help organisations meet their ever-rising fraud and compliance obligations has never been higher – tools that pair robust authentication measures with a great customer experience.

And key to this is being able to leverage truly digital solutions that circumnavigate channels that have long been compromised by scammers, such as one-time-passcodes sent via SMS text message.

To achieve this, e-sellers must digitally mature their operations to enable the creation of strong customer ID strategies that make it easier to authenticate genuine customers and weed out the malicious actors using stolen credentials or other techniques to defraud the business.

Being able to prevent these forms of attack in a streamlined and seamless way can have a domino effect on helping prevent other forms of online fraud. For instance, preventing customers from ever having their money stolen also protects the seller from the further risks associated to chargeback fraud and payment fraud, which further bullet-proofs their bottom line.

To achieve this, their approach to online authentication needs to be transformed from the process-driven interruption that it currently is for so many, to a friction-free path to safe transactions, repeat purchases and loyalty.

With customers and fraudsters online in greater numbers, retailers must create  a robust digital ID strategy not only protects customers but doesn’t turn them away. By baking authentication into the customer journey through truly digital tools such as biometrics technology, enterprises create improvements in the user experience, can identify repeat customers, deliver personalised offers, and build lasting trusted relationships with them.