If you’re looking to grow your business, expanding globally is the logical next step. The international e-commerce market is huge, with countries like China, India and Nigeria leading the way. Global e-commerce retail sales are expected to hit $4.9T in 2021, up from $2.8T in 2018. With such an abundance of eager and untapped consumers, you can’t afford not to expand internationally.
But as with most opportunities, there are always risks involved, and fraud may be a main concern when engaging in international business. Consumers in international markets are different than your local consumers, so using a traditional anti-fraud strategy that looks at historical data and patterns, may be unsuccessful. You could be setting yourself up for failure in two ways:
- You won’t catch international fraudsters when they try to exploit your site.
- You may blacklist genuine customers due to false positives, when good customers get falsely flagged as fraudsters.
Fraud should not be a roadblock to your business’ expansion, but these mistakes can severely hinder your progress if and when you do decide to enter global markets. Luckily, there are ways to ensure you’re keeping yourself free from fraud while setting yourself up for success in new markets.
Consider Cultural and Regional Norms
An understanding of your potential customers’ behaviors, and how they shop online, is imperative to catch fraudsters and cut down on false positives. Traditional fraud rules, based on a local customer base, may not be nuanced enough to properly identify fraud at a global level.
For instance, Chinese shoppers have different behaviors compared to other markets:
- Mobile e-commerce penetration is much higher in China compared to UK (52% market share in China compared to 40% in the UK as of March 2019).
- They’re willing to pay for nearly everything using mobile payment, from P2P transfers, to tea, to taxes, and utility bills. And mobile fraud requires a unique prevention strategy.
- Bill splits via mobile are quite common (especially when it comes to China’s millennial market) but can look suspicious since the same payment is being sent from different devices.
Consider Your New Customers’ Technologies
When considering your anti-fraud strategy, you have to make sure it’s tailored to the right customer profile for the right territory—think platform, payment system, user details, and more. Shoppers in Nigeria will use different payment methods than shoppers in China, and earlier this year, Whatsapp Pay launched in India, processing about one million transactions a month, on just a test audience.
If your fraud solution doesn’t consider how consumers shop and through which channels, you might find yourself struggling to catch fraudsters.
Think About Your Fraud Strategy Holistically
Merchants need to see their international fraud strategy as part of their overall international business strategy. Fraud doesn’t exclusively impact the risk department. It impacts the e-commerce customer experience, takes away from marketing investments, introduces security and privacy concerns, and obviously has massive financial implications. When planning how to fight fraud at a global level, you’ll need buy-in from multiple departments, and need to show how and why the strategy you’ve chosen will succeed. Fraud and false positives will compromise the expansion efforts of the rest of the organization. Merchants can’t afford to keep fraud prevention siloed when expanding internationally.
Using an Identity-Based Anti-Fraud Solution Allows Organizations to Scale
Rules-based anti-fraud technology might work domestically. But the variables are too wide for a rules-based engine to filter out real customers and catch actual fraudsters internationally. To properly leverage anti-fraud technology for international markets, you should look for a solution that eschews rules-based mechanisms and instead uses an identity-based approach to easily distinguish good customers from bad actors.
By looking at thousands of data points per transaction, and not just limited, inflexible rules, you will be able to more quickly and accurately identify the customers you need to keep and the fraudsters you need to stop, allowing you to grow and expand into new markets. Rules-based strategies are too limited and tied to distinct markets, so you’d have to do the same work each and every time you want to expand, slowing growth and potentially costing future revenue.
When entering a new market, you want to make a good impression right off the bat. So speed is crucial. A real-time, automated strategy ensures you’re not spending your (or your team’s) time manually reviewing each transaction to look for fraudulent patterns. That’s too costly for your business and can cause friction for your customers. By employing a real-time anti-fraud solution, you can continuously improve your anti-fraud strategy without risking any transactions or losing customers. Through machine learning and artificial intelligence, your anti-fraud solution gets smarter and more effective as your company continues to grow.