Consumers are still shopping online more than ever seven months into the global COVID-19 pandemic. One recent study found that new customer accounts now represent 30 percent of all transactions made online, for example, five times as many as they did prior to the crisis. This growth is a double-edged sword for merchants, as they need to keep up with consumers’ shifting payment expectations online and in-store while protecting their data against increasing numbers of fraud attacks.
Cybercriminals have been emboldened by the ongoing pandemic, utilizing a variety of old and new techniques to skim money and personal data from vulnerable online platforms or legacy systems. Credit card fraud and identity theft volumes have both ballooned in recent months, and fraudsters have targeted in-store pickup as well, shooting fraud attempts up by 55 percent, according to one report. Merchants thus need to move quickly to keep payment details protected as consumers shift their business online, explained Ben Groom, chief digital officer for furniture and home goods retailer Herman Miller.
“Our products are highly considered purchases and often involve high-touch customer service, so this may not be as much of a challenge for us [as for] a retailer with a large cash-and-carry business, but as our digital business has grown, we have remained focused on fraud prevention,” Groom said in a recent PYMNTS interview.
Failing to properly secure consumers’ online payments can have costly consequences for merchants that are also trying to meet the need for more payment variety. Herman Miller is tapping automated tools to do this, Groom continued, as they allow the retailer to respond flexibly and quickly to potential fraud — and help legitimate consumers transact more smoothly.
Shifting Payment Behaviors And Fraud
Fraudsters, like merchants, follow where consumers lead, meaning that fraud prevention tactics have always been changing for banks, payment providers and retailers. How, where and why consumers are transacting has shifted rapidly during the pandemic due to both health and economic concerns, and online payments have claimed a bigger role in commerce.
The pandemic-induced jump in online purchases can actually mask the growing fraud threat for retailers, however, according to one recent report. The flood of new online users can make it seem as if fraud attacks are actually decreasing, partially because this explosion of new users can also lead to a rise in false declines. Retailers are five to seven times more likely to erroneously label transactions as false when they involve new rather than returning customers, the report claimed. Retailers’ fraud protection strategies must therefore be nimble enough to oust actual fraudsters while leaving legitimate new customers’ purchases in peace, a balance Herman Miller is looking to achieve with automation, Groom said.
“Automated monitoring and third-party tools in this area have made major strides in recent years, so we try to leverage a combination of several different automations along with support from an internal team that makes sure we are up to date on best practices for fraud prevention,” he said.
Using automated technologies that can create that necessary fraud barrier also means that retailers can concentrate more on responding to consumers’ changing payment needs. Herman Miller recently relaunched its online site for furniture retailer Design Within Reach (DWR), for example, complete with support for more traditional credit and debit payments as well as implementing buy now, pay later (BNPL) installment payment plans.
“We have always offered the ability for our customers to purchase with a variety of payment methods, but our strategy in the last year has evolved to place even more emphasis on this,” Groom said. “We continually re-evaluate what payment options we have based on data and customer research. For example, in the customer-journey work we did in advance of our most recent replatform of DWR.com, we found that our customers wanted fewer payment options than we had initially anticipated, and we simplified our road map based on these learnings.”
Fraud protection is critical to meeting those shifting needs, both to keep legitimate customers from growing frustrated and to safeguard their payment details. Responding to consumers’ payment demands will likely become more important for competing merchants as the pandemic’s long-term effects ripple out into how consumers work, shop or find entertainment.
Payments And The Future Of Retail
Consumers are not just changing how they pay — they are also making new choices when it comes to what they are buying and why. The average consumer is spending more time at home, for example, even as brick-and-mortar locations tentatively reopen, a trend that is likely to significantly impact retail as well as social trends for years to come.
“The pandemic has not only resulted in a major shift in consumer buying behaviors — how and what we buy online — but has also created new demands for multifunctional spaces,” Groom said. “With work-from-home and remote learning a new normal, our homes have to work harder than ever.”
Retailers will need to adapt swiftly to these large-scale changes if they are to retain consumer loyalty. Leveraging automated technologies to ward against fraudsters that are also attempting to adapt to this new commerce normal may be the first step to ensuring merchants can stay in consumers’ good graces.
