Optimise your payments strategy to protect the shopper experience and filter out fraud

Businesses invest significant sums in creating slick eCommerce offerings, from platform development to content delivery, and from advertising campaigns to search engine optimisation (SEO).

So, the last thing any retailer wants to see is the smooth and intuitive digital experience they’ve created being let down by a difficult checkout process. Just like everything else in the journey, the payment experience should be seamless and friction-free.

A lengthy authentication process just doesn’t fit with the modern shopper’s expectations of a digital experience. Over a quarter (28%) of retail now happens online as eCommerce continues to grow¹, and one in five payments are made using an eWallet such as PayPal, Apple Pay or Google Pay². Research has shown over a third (34%) will abandon a shopping cart simply because they were required to create an account³.

Fighting back against fraud

Yet, a critical element in any eCommerce strategy is guarding against fraud. Protecting both businesses and customers is a growing problem: according to UK Finance, fraud in the UK rose to a level where it poses a ‘national security threat’, with £745m stolen from bank customers in the first half of 2021. Two-thirds of fraud losses on UK-issued cards came from eCommerce⁴.

It’s the seriousness of the fraud risk that is behind regulations such as the Payment Services Directive (PSD2) – and which sees Strong Customer Authentication (SCA) coming into full effect in the UK from 14 March 2022. SCA requires shoppers to use two independent authentication elements to verify online payments, a process also known as two-factor authentication. The industry standard for authenticating card payments is known as 3D Secure (3DS). The latest iteration of this is 3D Secure version 2 (3DS2), which supports better fraud prevention and is adapted to mobile and in-app experiences.

A rise in abandoned transactions?

However, as useful as 3DS2 is for many businesses, it could potentially result in more customers having to go through authentication steps when making an online purchase. This has been the experience in Europe, which is further ahead than the UK with its implementation of SCA. In fact, due to the extra steps required of customers, some markets have been seeing basket abandonment rates in double digits. As many as three out of every four payments in the EU have been challenged (on average) since SCA came into force⁵.

We have to be cautious about reading directly across from other European countries to the UK, because every market is different. However, the rates of abandonment being seen are a cause for concern and drive the need for additional planning when it comes to the UK roll-out.

Solutions to protect the shopper experience: Barclaycard Transact

However, the good news is that solutions are at hand. Firstly, it’s possible to apply exemptions from additional customer authentication steps for low-risk transactions if you’re using 3DS2 – and data shows that there are significantly higher acceptance rates for transactions when exemptions are applied.

But there are ways of going even further than this. Our solution is Barclaycard Transact. It’s a fraud prevention tool that also helps businesses convert more sales by protecting the quality of the shopper experience. It makes it possible to fight fraud intelligently, while more genuine customers pay quickly and stay safe.

Using the power of data for safer shopping

As the largest bank-owned acquirer in Europe, and with one in three transactions processed by the Barclays Group, we have been able to draw on huge amounts of data in creating Transact, building up comprehensive models of normal and abnormal patterns of shopping behaviour. Transact utilises advanced machine learning technology to analyse payments in real time. It builds a digital persona to score a transaction for risk and then judges it against a set of risk criteria before a decision is made to approve, challenge or deny.

There are three key solutions within Transact, with customers being able to choose whether to activate one, two or all three:

Boost genuine payments: fraud screening tools could help minimise chargebacks and false positives, give instant decisions and increase order acceptance.

Drive performance: with data-led insight, we can fine-tune your payments to help optimise acceptance rates, address declines and reduce fraud.

Accept more transactions: adopting Transaction Risk Analysis (TRA) exemption can help you accept customer payments faster and reduce friction for more customers.

Transact has already been helping our customers to manage and increase the quality of their payments experience.

Transact in action:

Challenge: LV= General Insurance wanted to offer secure, frictionless digital payments to its customers, whether they’re at home or on the go.

Action: We brought together gateway and acquiring with fraud prevention tools to maximise payment acceptance.

Solution: By using Transact, LV= saw its acceptance rates increase by 4% and transaction times reduce significantly.

A bright future

In the digital era, shoppers simply expect the online experience to get better and easier as time goes on. We believe that the opportunity exists to both embrace the protections of SCA and optimise the shopper experience. While fraud remains an ever-present challenge, Transact can help keep your customers secure, protect the quality of their shopping experience, and keep your business growing.

Find out more about Transact or speak to your Barclaycard contact to discuss – we’ll be delighted to help.

Sources

¹ Office for National Statistics, Monthly Business Survey, Retail Sales Inquiry, September 2021.
² Barclays consumer debit data, October 2020.
³ Baymard Institute, 2021.
⁴ Fraud the facts 2021, UK Finance.
⁵ Barclaycard acquiring data.