ClearSale
As the volume of e-commerce transactions increases, businesses of every size must be vigilant in protecting themselves against online fraudsters. Targeted fraud control measures are critical to separate the good customers from cybercriminals.
But selecting those measures isn’t as easy as it sounds. With a wide range of outsourced fraud protection and managed services solutions available, merchants need to know how to make the right choice for their businesses.
How Outsourced Fraud Protection Is Different From Managed Services Solutions
Because not every company needs the same level of fraud protection, a wide range of fraud protection solutions are available, each with their own features and benefits. What makes managed services and outsourced fraud protection solutions different?
Fraud managed services is a proactive approach that focuses on fraud prevention. With this approach, the goal is to prevent fraud from ever happening. A team of experts manages all aspects of the business’ e-commerce activity, actively watching transactions so they can stop fraudulent orders before they’re approved.
It’s important to note that fraud managed service providers are liable for the fraud risk if a fraudulent transaction is approved, and they’re responsible for delivering the best indicator among chargeback, declines and response time.
In contrast, traditional outsourcing is a reactive approach. Outsourced fraud solutions typically aren’t as robust as managed service solutions and could simply be a combination of a case management tool and a call center. This often means there’s no concise agreement in place with key performance indicators (KPIs), like chargeback, declines and response time.
Because this approach is more limited in scope, it can be a more budget-friendly solution, but the lack of comprehensive prevention can make it more expensive in the long run.
But that’s just the beginning. Other differences include:
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Managed Services Solutions |
Outsourced Solutions |
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Automated Decisions |
Make recommendations after comprehensive and efficient reviews of transactional information |
Approve transactions based only on a combination of different fraud tools, frequently with limited amounts of information |
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Flagged Transactions |
Manually review every gray area transaction, and provide instant decisions on non-flagged transactions |
Automatically reject some transactions that fall into gray areas and manually review just a part of them |
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Standalone vs. Integrated Approaches |
Integrate and enhance existing solutions for comprehensive coverage and support |
Hard to layer fraud prevention tools on top of outsourced services |
Identifying the Best Solution for an e-Commerce Merchant’s Fraud Protection Needs
Fraud managed services and outsourced solutions are so different, it’s difficult to compare them side-by-side.
Before retailers can even start the decision-making process, they must have a solid understanding of their specific fraud protection needs — including functionality, service and performance levels. Retailers should then evaluate each fraud protection solution against these defined objectives, rather than comparing one solution against another solution.
For example, businesses may want to evaluate a fraud management strategy based on some of the following options:
- Comprehensive, multilayered fraud prevention approaches. A mix of machine-learning algorithms and staff trained in fraud validation can help businesses effectively identify fraud and reduce false declines.
- Integration with other platforms. Solutions should integrate seamlessly with existing fraud protection and shopping cart platforms.
- Dedicated outside team. A group of experts should focus on your business while also keeping current with the latest attack methods and evolving fraud patterns. This team may be a complement to — or a replacement of — an in-house fraud prevention team.
- Is the solution flexible enough to meet multichannel demand and adapt to developing payment types and sales trends?
- 100% chargeback guarantee. Does the solution offer 100% reimbursement of any fraud-related chargebacks that it approved?
- Ease of use. Features such as user-friendly dashboards can make data easier to analyze and enable merchants to act more quickly on questionable transactions.
- Flexibility. Is the approach customizable based on the business’s needs?
Implement the Right Strategy Today for Comprehensive Fraud Protection Tomorrow
As fraud continues to pervade the e-commerce marketplace, exposure isn’t a risk e-commerce businesses can afford to take.
Choosing the right solution from the wide range of fraud prevention services isn’t simple, but the payoff is significant. By committing to effectively fight against fraudsters, merchants can position themselves to reduce fraud and false declines and increase customer confidence and revenues.
Implementing a comprehensive fraud protection solution into your e-commerce environment can protect your business against the rising threat of fraud. Contact a ClearSale credit card fraud analyst today to learn how our multilayered approach can help you increase approval rates, minimize chargebacks and prevent fraud attacks.
