SEAMLESS AND SECURE: Navigating the Future of E-Commerce

May 25, 2016         By: Sean Riley

Two large-scale trends are coming to a head with merchants at the crux: the digitization of payments and increasing e-commerce fraud. The former was an inevitability with consumers’ desire to make payments how and when they want using emerging devices, such as smartphones. The latter was similarly inescapable as EMV began to bring enhanced security to the brick-and-mortar channel and as more consumers brought their shopping to the online/digital channel. During 2015, online, or card-not-present (CNP), fraud increased 215 percent[1] and, according to Aité Group, CNP fraud is likely to double to $6.4 billion by 2018.[2]


“Today, the lines are blurring between brick-and-mortar and virtual commerce,” said Arvind Ronta, Director of Commerce, Security, & Data Products at Discover. “Digitization continues to increase in the retail world, consumers expect to complete transactions on their terms, and merchants are focused on new ways to increase their sales. All of these factors are converging and creating an abundance of data and priorities for merchants, from better understanding their customers, to enhancing security across their sales channels.”

While the converging trends present a challenge for merchants, there are plenty of opportunities as well. The valuable information available to merchants regarding customer behavior is greater than ever, especially given the varied methods with which consumers can interact both at brick-and-mortar locations as well as online.

“Merchants are looking for better targeting and marketing attribution,” Ronta added. “They want fewer fraud losses, as well as fewer declined good sales. And last, but certainly not least, they want to increase sales.”

On the other hand, he explained, “Consumers have their own expectations. They want secure transactions—with zero disruptions. They want a smooth, seamless and convenient shopping experience. And they want to be rewarded for their patronage with relevant, valuable offers that will incent them to return to that same merchant.”

Discover leverages its closed-loop model and big data platform to better target customers with loyalty incentives, such as those available through Discover’s rewards offerings. These initiatives leave consumers feeling like they are receiving personalized attention from merchant brands.

“Discover is uniquely positioned to help merchants both satisfy the growing demands of consumers and fight online CNP fraud,” Ronta said. “Due to our unique infrastructure, we work with issuers, merchants, and cardholders to create innovative solutions, meaning we can help bridge the gap between consumer data and consumer engagement. One such solution is a rewards platform that enables merchants to provide Discover cardholders with relevant online offers, which can drive incremental spending.”

After the groundwork has been laid, ensuring that these interactions turn into sales is dependent upon a merchant’s readiness to accept whichever payment method the customer is comfortable using. Consumers are becoming accustomed to seamless payment experiences that remove any friction from the process. Whether customers want to pay by tapping their smartphone, or with a chip card at a mobile point-of-sale terminal in the store, it is essential that merchants are ready to easily complete a transaction. Those that effectively support mobile payments at this early stage will benefit greatly as consumer adoption swells — projections from Aité Group place mobile sales as high as $487 billion by 2020.

Protecting this rapidly expanding CNP channel is the next step to a holistic commerce experience. Defending against threats while avoiding potentially disruptive delays in transactions can be achieved with a multi-layered approach to security, according to Ronta. The combination of data validation via the Discover Verify+ solution, along with Fraud Alerts and 3D Secure 2.0, can drastically mitigate the risk of fraudulent charges and potential chargebacks.

“To battle online fraud, we offer holistic fraud solutions that balance merchant and cardholder expectations,” Arvind said. “We approach fraud solutions in a layered manner, so that they work in tandem to provide multi-point protection across the entire online transaction process. Merchants can best position themselves for a safer checkout by also taking a layered security approach – considering all payments channels, from in-store to online and mobile.”

Ronta is giving a keynote presentation at the 2016 CNP Expo this week to provide these insights and more. His talk, titled “Making E-Commerce Smart and Secure,” addresses how merchants can best face all of these challenges and find success in the changing e-commerce landscape.

This article was brought to you by Discover Network. To learn more about Discover’s data and fraud products, visit Discover Network Products. For more insights into consumer trends and the world of payments, visit Discover Network Perspectives.

[1] Forter + Global Fraud Attack Index, Q2 2016

[2] Aité Group, June 2014, “Card-Not-Present Fraud in a Post-EMV Environment: Combating the Fraud Spike”