Part one of our three-part ecommerce blog series discussed the risks and opportunities for merchants. In this second blog, we look at the purchasing journey through the lens of consumer-driven conversion.

Within an ecommerce transaction, the consumer and the payment are two key targets for optimization since both impact conversion. But it all starts with the consumer, who kicks off the digital purchasing journey as soon as they access a website. The purchasing process then continues through product selection, registering or logging into an account, confirming delivery details, paying for the purchase, and receiving final order confirmation.

The less cumbersome the process, the better the overall experience and the higher the probability the consumer will complete the transaction, generating more conversions for the merchant. A streamlined user experience also boosts consumer loyalty, which results in a dedicated pool of trusted customers that are likely to make additional purchases in the future.

However, delivering a secure and frictionless user experience (UX) while also preventing fraudulent activity is a significant challenge. Merchants that have quickly pivoted their operations for digital may find themselves with separate groups for each function – a marketing team for account sign ups, a security group for logins, and payment/fraud specialists for checkout – all with different goals and different tools and data used to make decisions. These siloed departments can create inefficiencies that not only make it more difficult to deliver a frictionless user experience, but can also open the door to fraud.

Creating an omni-channel experience

Every additional bit of data a consumer is asked to provide can add friction to the purchasing process. In fact, 35% of online transactions are not completed because of required registration. And 27% of customers are lost due to a complicated checkout process. It’s clear that more friction results in fewer conversions for the merchant and a less-than-desirable experience for the consumer.

The goal – and the challenge – is to intelligently balance opportunity and risk to prevent fraud without negatively impacting the customer journey and compromising a sale. This becomes increasingly complex when applied to all channels – mobile sites, web, native apps and a physical point of sale (POS).

Achieving a frictionless ‘omni-channel’ experience begins by eliminating business silos. The entire customer journey from registration to order confirmation must be viewed not as disparate steps, but as a complete, seamless, straight-through process. By monitoring consumers’ digital identities and their different online activities (registrations, logins, payments, shipping, invoicing, returns, etc.), an omni-channel solution can help provide the integration and consistency needed throughout the customer journey while also helping merchants to manage risks and grow their business.

Authentication and payment face new challenges

Several new requirements, including the EU’s Strong Customer Authentication (SCA), will make online payments more secure, but complicate the ability to provide a frictionless experience.
SCA, which goes into effect September 2021, will help reduce fraud and risk for merchants by requiring two-factor authentication based on something the consumer has, something they are or something they know. Although both consumers and merchants may find SCA burdensome, it is nonetheless expected to become the norm. Merchants must therefore try to accommodate the requirement in a way that minimizes as much friction as possible for the consumer.

This can be accomplished using information identified from a consumer’s digital journey, such as devices, email address, names, and behavior patterns. When coupled with a global multichannel identity and fraud intelligence solution, merchants can risk-assess and authenticate a consumer in a passive or invisible way before a payment is initiated. In other words, global identity intelligence could be considered the new currency for merchants to assess risk and make decisions accordingly in real time.

Another key point toward the implementation of SCA specifically in the UK, is that card networks and issuers will allow merchants and payment service providers (PSPs) to use their own FIDO (Fast ID Online) compliant – and approved by issuer – authentication process. Issuers together with card schemes can transfer their authority to merchants so that they can use their own payment authentication mechanisms. In this way, merchants will be able to send data to the issuer to show that they have authenticated the customer without employing the issuer’s solutions.

These developments can provide an innovative competitive advantage to merchants that implement a consistent authentication of their consumers throughout the customer journey while also helping them to meet SCA requirements. In addition, use of SCA factors that can be performed in the background, such as device binding and behavior biometrics, can assist merchants in fulfilling the SCA requirements which can reduce friction and improve the likelihood of a secured successful payment.

It may take time for issuers to understand the process and trust data provided by merchants. In the long term, however, SCA will create more trust in the ecosystem, reducing fraud and leading to better authorization rates by issuers and acquirers. This will benefit merchants, banks and consumers alike. Stay tuned for our final blog in this three-part series, which will focus on payments processing driven conversion.

The latest white paper from LexisNexis® Risk Solutions, Near Real-Time Risk-Based Assessment: A Catalyst for Successful Ecommerce Conversion, delves into the challenges, opportunities and risks inherent in global ecommerce with particular focus on the consumer and payments process. It explores how invisible authentication throughout a customer’s digital journey coupled with optimized payment authorization can help merchants strengthen their ecommerce conversion rates, maximize revenues, and build long-term customer relationships.