Fraud or Friction? Why slowing down a purchase can be beneficial in the long run
In discussing merchant deployments one of the areas of greatest interest is how we suggest clients implement their buy screens.
More than anything (yes, even more than the service itself), product owners ascribe an almost mythical importance to a frictionless buy process. The logic goes that if you slow down a buyer, they’re more likely to abandon the shopping process and you’ll lose a sale. Hence, there’s a strong desire to allow users to check out as easily as possible. This includes reducing the amount of information requested in the purchase process.
This has long been a hot topic with the services organization at Vindicia. Looking across a wide portfolio of merchants, we see the full spectrum of practices. We have clients in the financial services space, who may collect everything you can tell them about yourself, and can validate that it was all true (right down to the fact that your last car payment was late). At the other end of the spectrum, we have dating sites that ask for virtually no information at all, save the city in which you want to date and your credit card number. The check-out process is definitely quicker, but is it better? The “right” answer lies on a spectrum, depending on your business.
Some businesses have very high security needs, so it is appropriate to collect extensive data during the customer sign-up process. In most cases, consumers are accustomed to this type of data entry, and the buy process feels naked without at least some data gathering. In point of fact, we’ve seen significant cart abandonment when merchants fail to ask for CVV. Consumers have become so attuned to that security measure that they are uncomfortable when the merchant doesn’t request it. At the other end of the spectrum, we see social and dating sites, which cater to a typically young consumer, often on mobile devices. Anyone who has tried to fill in a web form on an iPhone or Android soft keyboard can attest to the limitations of the technology, and it becomes easy to understand why there might be drop-off. We’ve been advising our clients to strike a balance- collect enough data to discourage fraud, but not so much that you turn off the buyer. Fortunately for our clients, we have a deep data set on which we can draw to determine what might be a good fit for them. Because we are one of the few companies in our space that both processes the front-end transactions, and we also stick around to handle the chargebacks, we are able to do detailed analysis about what transactions will likely be “healthy” and which ones are likely to develop into fraud.
What is right for your business? Is tightening up your buy process guaranteed to get your fraud problem under control? Will asking for less data automatically increase your transaction volume in a sustainable way? Like most things, the answer lies somewhere in the middle. Using big data to help you find the right answer for your business is just one of the perks of doing my job.
To learn more about Fraud and Screening for Fraud, read our features sheet, Fraud Screening with Vindicia CashBox.