What smaller businesses can do to tackle fraud

It's all about smaller, online retailers for this episode. Gerry called up a friend of Ravelin's, Michaela Verstraeten, to get top tips for businesses who are encountering fraud for the first time.

Michaela has helped set up the fraud prevention systems and processes at major retailers such as Levis and Nike in Europe, and was on the board of the European Merchant Risk Council. Needless to say, she is well-placed to give some advice around setting up fraud prevention for businesses that are just encountering fraud.

And that's where the discussion begins - what should smaller businesses and startups do when they start to encounter fraud? Michaela answers that the simplest initial step is to turn to their payment service provider (PSP), and ask if they already have a fraud detection system in place. Most PSPs have at least a standard rules set in place that should pick up any beginnings of fraud.

Michaela continues that many PSPs will suggest turning on 3D Secure, which can be a good option for smaller retailers as it does shift the liability away from the retailer. However a common concern with 3DS is that it can be conversion killer especially for consumers shopping on their mobiles as the experience is particularly bad on smaller devices.

So beyond the tools that PSPs supply or 3DS, what else can smaller businesses utilise to protect themselves? Gerry and Micheala discuss various point solutions, or 1 tool solutions. These include services like chargeback guarantees and device fingerprinting. Depending on your business model, your transaction volume or even what industry you're in, these solutions could prove very helpful. Michaela advises to always keep your eye on the conversion rate however, as some of these tools might err on the side of caution so much when it comes to fraud risk that they'll turn away high volumes of good customers.

Eventually these smaller businesses and startups will need to consider a full fraud solution, similar to Ravelin for Merchants. Michaela suggests that when these businesses are starting to see 500+ transactions a day or then their percentage of loss to fraud hits 2%, they should definitely start looking at fuller fraud prevention system.

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Learn more about online payment fraud here.