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The 3 Most Prevalent Issues E-Commerce Retailers Face in Fraud Prevention

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Allie Roberts
E-Commerce Transaction

When polled to reveal the top three issues facing M-Commerce and E-Commerce retailers regarding their efforts to prevent fraud, the overwhelming response was that the biggest issues are:

1. Excessive number of transactions sent for manual review
Manual reviews are often triggered by the nature and types of fraud prevention solutions in place. Many retailers in both the mobile and online transaction channels utilize automated systems designed to flag suspicious transactions. These types of systems frequently result in a transaction that requires a manual review. Automated fraud screening does not incorporate any means to validate the identity of the person conducting the transaction. Because retailers are sensitive about potentially rejecting a valid transaction solely based on these automatic systems, they are more likely to send the transaction for a manual review when the automated flag rejects it.

2. Inability to authenticate identity of the customer
Identity theft is a greater problem for organizations that operate online or mobile channels than for those that don’t. The anonymity of “Card Not Present” (CNP) transactions makes identity theft much easier for fraudsters using remote channels than in person at a store or branch location. Identity thieves can capitalize on the trend of retailers offering the convenience of buying goods online and then allowing a return to be made in-store – especially when there is no requirement to authenticate identity during the return.

3. Delays in payment confirmation
The delay between when a customer makes a payment and when the payment goes successfully through to a business’ bank account can make it harder to detect fraudulent transactions. A fraud transaction may take longer to go through, seemingly a telltale sign. However, valid payments occasionally go through this hurdle as well making it much more difficult for online sellers to know when to hold an order in the pipeline.

With these three hurdles to overcome, the biggest step a retailer can take to bolster their fraud prevention efforts is to successfully authenticate the identity of the person making the transaction. In the realm of E-Commerce, this isn’t as simple as making sure an I.D. is real and matches the person in front of you. More innovative solutions are needed to solve the identity authentication problem in online transactions.

Authenticating ID Documents During M-Commerce and E-Commerce Transactions

The “Holy Grail” in fraud prevention in the modern environment is the ability to “know” that the person conducting an online or mobile transaction with you is, in fact, who they say they are.

PALIDIN.M, is a mobile application created just for that.  

Using the high-resolution cameras available on smart phones and tablets, PALIDIN.M allows businesses to capture images and digital data from an ID document. These are then submitted to the document authentication library. Images and data are compared to templates in the authentication library and a pass/fail grade is issued for the ID document. The addition of a facial comparison using a selfie image and the portrait from the authenticated document closes the identity authentication loop.

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Photo is captured from ID document Client takes a "selfie" image using the camera on their mobile device Facial recognition software compares the two and gives results

In every transaction, there is a critical moment when the merchant/bank/agency must decide whether to proceed with the operation. For a retailer, it can be after the credit card information is entered.

At this critical juncture in the client-not-present process, the software application – whether it is a shopping cart, online account management software or some other unique application – can prompt the user to enter their mobile phone number so that an identity authentication can be conducted. This will then allow an SMS (text message) to be sent to the client. The SMS message will contain a link which will, in turn, open the PALIDIN.M web-based ID authentication app. The client can then follow the steps to capture the images of the document and their selfie image and receive an authentication result which is passed back in the form of a token to the originating software.

With ID authentication completed, the transaction may be allowed to continue through the remaining steps. You can feel at ease knowing your client's identity has been successfully authenticated. 

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