How smart fraud prevention can turn Indian ecommerce opportunity into reality
With a large and rapidly growing market of online shoppers – whose market value is projected to reach $120 billion by 2020 ecommerce in India is an attractive potential growth market for many online merchants. In order to capitalize on this opportunity, however, etailers must successfully meet the challenge of fraud prevention in this unique market. Common “solutions”, such as blacklists, extensive manual review, and verification tools tailored to the desktop won’t work in a market the size of India and its particularly high percentage of customers shopping from mobile devices.
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As is common in many developing countries, much of India’s first and primary connection to the global Internet is through their smartphone or tablet – this “leapfrogging” of desktops and laptops is reflected in Indian ecommerce. This is especially true among in the 25-34 age group, where 90% of customers use their mobile devices to shop online.
Mobile is where most of the action is
Online shopping from mobile (mCommerce) is very common among consumers in India, and merchants whose sites feature a “mobile first” design thus are well-positioned to tap into this huge market. Being well-positioned, however, is not enough. Those merchants must also be well-defended against card not present (CNP) online order fraud, which requires a different approach on mobile than it does on traditional desktops and laptops. For example, IP addresses of mobile devices can change a lot more frequently, something you wouldn’t expect with a fiber, cable or DSL connection. If your fraud filter doesn’t take this into account, you may be losing a lot of revenue due to false declines.
Overblown fear of fraud is a costly mistake
Another requirement of being successful in ecommerce in India is keeping your volume of false declines as low as possible. Yes, we’re all aware of how chargebacks from fraudulent orders can inflict heavy losses on an etailer’s bottom line, but many merchants looking to expand into India have a fear of CNP fraud that is larger than what’s seen in actual online order data.
Speaking of oversized fears, another aspect of ecommerce in India is the entrenched popularity of cash on delivery (COD) orders. This stems in part from a widespread suspicion of the security of online shopping among Indian consumers. Using credit cards or e-wallets to pay for online purchases at order time is catching on, but slowly. On the upside, the ability to choose COD was instrumental in launching ecommerce in India to begin with.
But let’s turn our attention back to the merchants. Merchants who delay entering the Indian eCommerce market out of fear of high rates of CNP fraud are leaving a lot of money on the table. The same goes for merchants already doing business there who falsely decline a large number of legitimate orders.
The need for adaptable, effective fraud prevention solutions
In India, common “solutions” to the problem of CNP fraud won’t work in a market the size of India and its mobile heavy shoppers. Real solutions, like those from ecommerce fraud prevention solution vendor Riskified, can increase the profits of any merchant selling to customers in India, or any which are about to. In Riskified’s case, thanks to their proprietary web beacon and proxy detection technologies, they gather the necessary data for making an accurate decision with very little friction for the customer, something which is tricky to do on mobile given the limited screen real estate. Their solution then uses machine-learning and dynamic linking of that gathered data, as well as info from data sources from all over the web to safely approve online orders. This approach boosts revenue by decreasing false declines while at the same time slashing the losses incurred by chargebacks.
By using more sophisticated fraud prevention solutions, merchants can confidently expand into the large Indian ecommerce market and reap the rewards.
Author: Debbie Fletcher
