When Ezzie Schaffran, chief operating officer of Certified Watch Store, approached us last August, his site, CertifiedWatchStore.com, was using a hodgepodge of outside and in-house security measures to catch payment fraud.
Schaffran has a long history of fighting online payment fraud, having served as COO of jewelry e-retailer Ice.com. He considered a crop of vendors offering transaction insurance for CertifiedWatchStore.com, but says he found the fees, which ranged from 0.5% to 3% of the transaction value, higher than he thought practical.
He also looked at so-called 3-D Secure authentication protocols that require cardholders to register and create a password for their payment card with the likes of Visa, MasterCard and American Express that they then use to log in before a retailer authorizes payments. While 3-D Secure protocols shift some liability for fraudulent transactions away from the merchant, Schaffran felt those systems slowed consumers down and led to too many dropped transactions.
Instead, he opted for NoFraud, a full-service fraud prevention platform that uses factors such as the purchaser’s location, global blacklists of criminals and device identification in determining the legitimacy of transactions. When legitimacy remains unclear, NoFraud contacts the cardholder to personally confirm any questionable, non-automated transaction decisions. NoFraud charges a fee per transaction that is based on transaction volume and transaction value, and the average customer pays 10-20 cents per transaction. All of Certified Watch Store’s transactions go through NoFraud’s process, and Schaffran says the e-retailer has not had any fraudulent transactions since it began using the service.
The automation of the service provided means Schaffran doesn’t have to spend any time manually reviewing orders. Since switching, he says he’s cut the time staff devoted to fraud detection by 95%. “For the first time in my long career, I can actually focus more on customer experience, than fraudulent payment detection,” he says.
Shaya Posner, chief technology officer of NoFraud, estimates that online retailers check 27% of all transactions manually. But the number can vary greatly depending on what an online merchant sells.
Read the entire article from The Internet Retailer here.