How The Growth of The eCommerce Industry is Curtailing Fraud
How The Growth of The eCommerce Industry is Curtailing Fraud
The Coronavirus pandemic has seen the eCommerce sector through various stages of growth in only such a short time. In three months, the industry has expanded and been reshaped to tailor to the demands of the pandemic.
Adam Cohen, Head of Enterprise at Payoneer, says the statement above might come off as a fancy way to measure the industry’s growth but the reality is that it is all facts. The statistics are accurate. In just eight weeks of the government-mandated lockdown, the eCommerce industry grew to 27% from 17% whereas it took ten years to see the same 10% growth between 2009 and 2019 in America.
As the industry is experiencing a spike in customer numbers, so is the rate of online crime and fraud cases. Swindlers are looking for new openings to rip-off these new customers, as the market widens and breaks into new niches. Businesses are expanding their online presence and are recording new customers. Many of these customers are first-time digital shoppers taking baby steps into the world of eCommerce.
Cohen points out that “Consumers are buying online products that they didn’t buy online before. Perhaps more importantly, those who are now switching to online for the very first time are making their first digital purchases ever, and these types of changes usually last after the end of whatever caused them in the first place, so we expect eCommerce to continue to benefit in the long term.”
For growing online businesses, there lies a challenge to fully leverage the endless gains and possibilities of the eCommerce sector and build a forte impenetrable to ever-waiting swindlers, especially after the pandemic is over.
Riding The eCommerce Growth Wave
Instead of a visible influx of new trends into the market, the effect of the coronavirus pandemic has rather propelled more businesses to move their operations online. This migration started early this year but the pandemic is radically speeding up the process, especially for old businesses. Now, more than ever, traders are seeing the need for their brands to have a strong online presence. Not only that, but they are also morphing their sites to serve customers efficiently. Many businesses are riding this growth wave as in recent times, we have seen new and old brands breaking into the eCommerce space.
A notable example depicted by Cohen is that of the eCommerce sector in Southeast Asia. Before the pandemic, it was the standard for a majority of online orders to end with cash on delivery services. In current times, that is no longer the case. Customers are opting for digital methods of payment.
Cohen points out that paying for orders with cash has proven to be ineffective following the prevention demands of COVID-19. Customers now prefer to pay online before deliveries or pay at the delivery point with digital methods. As such, many online stores are incorporating cashless payment methods into their checkout processes.
The same is the case in Latin America, where until recent times; orders were completed with cash payments on delivery. In March of 2020, over thirteen million Latin Americans bought something online for the first time. So many activities are becoming digitized – working, shopping, entertainment, and even learning. Smart entrepreneurs are riding this growth wave and providing services that tailor to the demands of the pandemic and ever-waiting customers in these new niches. Such businesses are beginning to morph their organizations to accommodate the needs and demands of their clients.
Cohen points out that “we’ve seen the platforms coming to us for help automating their pay-out processes because their current setup isn’t scalable to the demand they are seeing. That’s been a very strong trend, and we’ve seen many platforms growing by over 50% in Q1 alone, and we expect them to continue to keep that momentum and scale in Q2 and Q3 as the pandemic is changing consumer behavior and lifestyle.”
Riding this new growth wave calls for safer trades, which is becoming more and more puzzling as steadfast online fraudsters plague businesses that are migrating online.
Scaling The Ever-Rising Hurdles of The eCommerce Sector
Cohen says that cybercriminals follow customers everywhere. He notes that his company, Payoneer has witnessed a stable uptick in tries at different types of fraud worldwide. He adds that during the pandemic, the security challenges have affected online businesses; because of their risky platform which does not have total control over its sellers.
He notes that “marketplaces are exposed to all kinds of risks from the supply side, which is to say the seller side. It can be what we would call hard fraud or more mundane issues, such as providing a low-quality experience, not delivering on time, or delivering the wrong product.”
Cybercriminals who create replicas of legit online stores and mail out empty parcels or nothing after receiving online payment are a threat to real businesses. These unlawful acts cause real businesses to lose money and customers. The slack trader who piles up negative reviews damages the reputation of the brands involved. For these people, these acts are hard to deter and tackle as they have become professional cybercriminals.
Cohen says that “we need to understand that the fraudulent seller runs a business, and these are professional fraudsters and are very thoughtful, and they know all the tricks to get away with fraud. So in a typical scenario, [they] set the infrastructure for a new store, such as an entity or VPN. They will then open a new store, sell on the marketplace, and commit fraud – and the marketplace will end up shutting down their store. But then the cycle will repeat itself. They will open up another new store, and so on.”
For Payoneer, building a forte against these tactical cybercriminals involves kicking them out and making sure they stay out and do not set up shop somewhere else.
“What we do is pretty unique. We leveraged the seller’s behavior across our network in multiple marketplaces so we can identify when they move between them,” he explained. “And it also allows us to identify what seem like different stores and sellers, but in reality are the same entity. And we do this with our own store and account linkages to an ecosystem of stores and sellers, which allows us to establish the identity of the ultimate beneficiary who is really behind these stores.”
From Payoneer’s perspective, the future of eCommerce is digital, as buyers who have tasted the online marketplace are not likely to return to previous purchasing methods. However, the wave for this sector will continue to grow as long as the participants can meet their customers’ demands and provide a fast and secure experience for them. The goal of every business is overcoming all possible challenges to attaining this status.