As the growth of online pick-up has grown exponentially since the coronavirus store closures, the volumes of both legitimate users and fraudsters have also increased significantly. Retailers are challenged with creating systemic processes for acquiring the maximum number of new honest customers but insuring fraudsters are prevented from engaging in fraudulent activity.
The biggest challenge is the number of new customers purchasing online which is now accounting for about 20-25% of total transactions. Pre-COVID-19, new customers purchasing online comprised only 10% of transactions. As more customers turn to online purchasing, new accounts are being opened. The decline rate for new accounts is 40-50% on average but within those declines are some legitimately desirable customers, so for retailers even a shift of 5% in approvals of valid customers can make a significant difference in terms of customer experience, increased revenue and loyalty. The costs of fraud detection are growing, especially online where many retailers have not yet built robust systems.
With increased consumer traffic, fraudsters look to exploit vulnerable touch points in the shopper journey where fraud prevention measures are not as robust. Increased orders online, cost implications from closed stores and other financial impacts have retailers under extreme pressure. Keeping in mind that 98% of customers are good customers, online businesses need to focus on acquiring as many new customers as possible.