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Two-thirds of retailers feel they lack tools to tackle omni-channel fraud

More than 50% (54%) of retailers in Europe and the US still have to consolidate their fraud management solutions across all channels, according to new research conducted by Forrester Consulting commissioned by ACI Worldwide.

The research reveals that omni-channel data aggregation, the increasing number of payment options, the demand for faster fulfilment and the rapidly changing nature of fraud all present significant challenges to retailers’ fraud management programs.

How do you address the risks associated with changes in customer behavior in an omni-channel environment

How do you address the risks associated with changes in customer behavior in an omni-channel environment

Omni-channel retail sales are predicted to reach €920 billion (£660 billion) in Europe, or 44% of total European sales, by 2018*, with sales in the US predicted to hit $1.8 trillion (£1.1 trillion) by 2017.** As more consumers engage with retailers through multiple channels—with an ever-increasing range of payment methods and devices—retailers are faced with added challenges, including heightened exposure to fraud risk and increased complexity for fraud management.

“We are seeing an increase in cross-channel fraud that highlights the importance of having a cohesive omni-channel fraud strategy touching all sales channels. The survey shows that 60% of merchants believe they know what they need to do to combat fraudulent activity, but far fewer believe they have the tools to enable them to do this successfully,” said Jackie Barwell, Director of Fraud Product Management, ACI Worldwide.

How do you address the risks associated with changes in customer behavior in an omni-channel environment

How do you address the risks associated with changes in customer behavior in an omni-channel environment

 

“The lack of adequate fraud management tools and skilled staff revealed in this survey is a real concern. Retailers need a combination of fraud rules and analytics that add speed and sophistication to fraud detection, and they need access to global fraud intelligence that can help them interpret and respond to fast changing patterns of fraud.”

The study also shows a mismatch between fraud trends and retailers’ ability to tackle new forms of fraud. For example, Card Not Present (CNP) transactions worldwide are growing at an annual rate of 15%, and will reach more than 27 billion (transactions) by 2018.

Which of the following fraud management capabilities do you currently have in place for your card-present (CP) and card-not present (CNP) channels

Which of the following fraud management capabilities do you currently have in place for your card-present (CP) and card-not present (CNP) channels

By comparison, card-present (CP) transactions are expected to grow less than 5% (4%) during the same time period.*** However, less than half of retailers surveyed say they use real-time rules and neural models for the protection of their CNP channels, while almost two-thirds say they use such tools for their CP channels.

Apart from sophisticated tools and the shortage of adequately skilled staff, respondents also believe that lack of funding (60%) and executive sponsorship (63%) limit their ability to perform effective omni-channel fraud management.

“It is clear from our study that many retailers feel unprepared to face the fraud challenges of an omni-channel world,” said Barwell. “There is a need for strategic and organizational changes, and an integrated approach to creating a true omni-channel environment for payments and fraud management.”

(NASDAQ: ACIW) and published in a report titled, Managing Fraud in an Omni-Channel World.

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