"Removing filters and reducing false positive declines leads to a sales revenue increase of anywhere from 3% to 30%. "
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MRC 2015<br />Wrap-Up

Last week, the annual Merchant Risk Council (MRC) Conference was held in Las Vegas, marking the marquee event for the risk and payments industry.  Over 1,400 professionals from across the globe gathered to share their views on the biggest challenges, trends and opportunities around CNP fraud.

The Riskified team left the event inspired by the energy present among both merchants and solution providers and the desire to solve the big challenges that exist today.  Having had a week to reflect on the hundreds of conversations and presentations, a few things are abundantly clear for our industry:

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What’s in a <br />Heart Beat?

We’re excited to officially launch our ‘Beat’em’ feature today. The feature, which analyzes online shoppers’ heart rate to identify fraud, was piloted for the past year with select beta merchants with outstanding results, and is now available to all eCommerce merchants.

‘Beat’em’ utilizes the same knowledge on which polygraphs are based, to identify excited or nervous behavior. A baseline heart rate is established within the shopper’s first few clicks or swipes on the site. This baseline is then compared to the customer’s heart rate at the checkout stage – when fraudsters use stolen credit card information to complete the transaction.  Thanks to ‘Beat’em’, the Riskified shopfront beacon, a snippet of code embedded in every page of a merchant’s website, can now track not only browsing behavior within the site, but also the visitor’s typing speed & heartbeat.

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Improvements To The Riskified Dashboard

We understand how vital customer experience is to the success of eCommerce businesses, which is why our service is designed to be streamlined and frictionless.  By instantly reviewing orders for fraud and providing clear ‘approve’ or ‘decline’ decisions, Riskified helps merchants keep customers happy and avoid shipping delays.

Order review time, meaning how much time passes between the moment an order is submitted to us for review and the moment we provide our decision, is an important KPI at Riskified. We’re now sharing this information with you, our customers, via the Riskified dashboard.

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The Essential Art <br />of Efficient Manual Review<br /> 

The importance of avoiding shipping delays to keep customers happy is something eCommerce merchants understand well. One factor that drives delays is that orders can get ״stuck״ in the manual fraud review queue, awaiting approval.  To avoid a backlog in the queue, merchants usually either hire additional analysts to join the manual review team or invest in improving the automated decisioning process so that less orders are routed to manual review.

In the 2014 Merchant Risk Council Fraud Survey, online merchants reported an average manual review time of 15 minutes per order, not at all bad. Unfortunately, we still see cases of merchants who don’t suffer from lack of resources but leave orders “sitting” in the queue for hours and even days. Orders are delayed not because the merchant cannot handle the load, but because of order review policies. The risk management team is instructed to reach out to customers for additional information in case of certain problematic characteristics, such as missing AVS information or a mismatch between the BIN country and shipping country. The orders are put “on hold” while the risk management team waits to hear back from the customer who placed the order.

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The True Cost <br />of Declined Orders

The Merchant Risk Council’s 2014 Global Fraud Survey showed that the average online store declines 2.6% of all incoming orders due to fear of fraud. For a $25 million business, this means you’re rejecting orders worth $667,000 annually. But the cost of declines is even higher than the lost sales revenue alone.

To understand the true cost of declines, one must consider all the factors involved in a holistic risk management approach –  including the sales and marketing investment that goes to waste when an order is declined. Whether online media, SEM, or social media campaigns, eCommerce companies invest considerable funds and energy in customer acquisition and retention – bringing users to the website, converting them into customers, and trying to ensure they become repeat customers. Successful online fashion retailer ASOS, for example, invested a whopping ~$845 million in marketing in 2014, equivalent to 12.6% of its annual operating costs. If their decline rate were average, one could say 2.6% of that marketing budget, or ~$22 million, was lost due to fear of fraud. Add the lost life time revenue from good customers whose order was wrongly rejected, and you start getting an idea of how costly declines can be.

In this post, we share our philosophy of how to calculate the true impact of declines on your business.

To fully understand the impact and cost of declines for your business, the following factors should be considered:

  1. Customer Acquisition Cost (CAC) 
    What is the cost of bringing users to your site and converting them into customers?
  2. Customer Lifetime Value (LTV)
    How much revenue does the average customer generate for your company over time?
  3. Impact of Falsely Declined Orders
    What is the financial impact of false positive declines on your business?
  4. Impact of Wrongly Blocked Orders
    What is the financial impact of blocking orders before they reach your fraud team?
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The Riskified <br />Resource Center

We’re happy to announce the launch of the Riskified Resource Center, where all of our online risk management and ecommerce fraud prevention content can be accessed.

Whether you’re struggling with a high decline rate, building a fraud team, or looking to expand your online business internationally – our resource center has something for you.

We aim to create actionable, valuable content. If there’s something you’d like us to talk about, we’d love to know. Simply click here and press the ‘Let us know!’ button at the bottom of the page.

In Risk Management,<br />You Reap What You Sow

Despite being critical to the profitability and success of eCommerce companies, online risk management and fraud prevention is often assigned as a secondary task to the payments or customer service teams. In fact, many businesses are reluctant to hire a designated risk management professional or team and will only do so after being hit with a significant fraud attack.
In this post, we’ll outline the problems this pervasive mentality creates, and explain why adopting a different approach to risk management is financially worthwhile to your organization.

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Stop Letting AVS Mismatches Kill Perfectly Good Orders

AVS (Address Verification System) was designed to combat CNP (Card Not Present) fraud. The idea behind this system is that cross-referencing the numeric portions of the billing address provided by the buyer with the numeric portions of the billing address on file at the credit card issuer would enable merchants to verify that the buyer is the rightful cardholder.

Payment processors encourage merchants to set automatic AVS mismatch filters as an anti-fraud measure. However, many merchants who use these filters do not realize that full AVS match does not ensure a transaction isn’t fraudulent, and on the flipside, orders with AVS mismatches are often legitimate.

In this post, we will show why rejecting orders solely based on AVS information is a bad idea.

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How to Ensure Optimal Fraud Team Performance During The Holidays

The holidays are an intense season for anyone in e-commerce, but those in charge of reviewing incoming orders for fraud really have their work cut out. Not only is there a dramatic increase in the overall orders, but Riskified’s data from previous holiday seasons shows that fraud on entry increases significantly as well.  Whether this increase in fraud is driven by fraudsters taking advantage of dramatically increased sales or by consumers committing “friendly fraud” due to stringent returns policies, handling these orders correctly is a challenge.

A properly prepped fraud team, armed with the right tools, can help merchants recapture revenue from transactions they might ordinarily decline.

Following are four steps merchants can take to ensure optimal performance during the holidays:

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1. Prepare your team for the spike in order volume

The biggest challenge risk management teams face during the holidays is the sudden, dramatic spike of incoming orders. It is imperative that orders be processed expeditiously, otherwise the back-log could have customers waiting several days for order confirmation.

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No Touch<br />Refunds

Riskified’s entire business model is based on aligning interests with our merchants, which is why we charge only for orders we approve and work hard to make sure the process of getting a refund from Riskified is hassle-free. Our ‘no touch refund’ feature simplifies the process of receiving a refund on Riskified’s approval fee for orders that didn’t ship.

After successfully piloting this feature with several merchants over the past 3 months, we’re excited to roll it out to all of our customers.

What does this mean for you?
You no longer need to email our support team to receive a refund for the approval fee.

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