Online Fraud Protection is Being Transformed

It is only natural that as ecommerce races into the future, the tools that ecommerce merchants use will race along with it.

Static product pages gave way to personalized assortments and product grids aimed at individuals. Ecommerce branched out from the desktop. Retailers quickly understood the potential of mobile commerce and worked doggedly to produce mobile experiences and capture mobile conversion. One-click ordering arrived to spare consumers from filling out endless fields. Delivery times sped up and continue to speed up. And Signifyd’s world, the world of fraud protection, has been undergoing a transformation, too.

The company is a pioneer in the field of guaranteed fraud protection, an offering that relies on big data, machine learning and human expertise to shift online fraud liability from merchants to fraud-protection providers, like Signifyd. The idea has been validated by the thousands of merchants who have become Signifyd customers.

And recently, third-party validation has been growing to the extent that it’s fair to say that guaranteed fraud protection has gained mainstream acceptance. Consider just two bits of evidence from one day last week.

First, Signifyd announced it had secured a $100 million Series D round of funding from Premji Invest, with participation from existing investors Bain Capital Ventures, Menlo Ventures, American Express Ventures, IA Ventures, Allegis Cyber and Resolute Ventures. Then, Kleiner Perkins Caufield & Byers venture capitalist Mary Meeker released her annual technology trends report. The report is something of a Silicon Valley bible of where technology is headed.

A significant portion of Meeker’s 294-slide presentation deck, addressed consumers’ buying practices —  the where, when and how shoppers buy and how the way they pay is changing. She noted that ecommerce had reached 13 percent of retail sales in 2017 and included a graphic charting the steep ascent of that figure.

Meeker laid out the tools that online merchants need to operate and thrive in such a world, including payment processors, point-of-purchase financing, delivery systems, customer support and fraud prevention. She listed various category leaders, such as Square, Stripe, FedEx, UPS, the U.S. Postal Service and Signifyd.

Signifyd’s inclusion in Meeker’s report was significant because of the kind of fraud protection it provides. Guaranteed fraud protection means that a fraud-protection provider will reimburse a merchant for chargebacks and other fraud costs on any approved order that later turns out to be fraudulent. The notion is only a few years old, but it is gaining wide adoption and significant endorsements from those who study the ecommerce industry.

By introducing the guaranteed fraud protection model, Signifyd has provided the answer for retailers struggling with the security vs. experience conundrum across geographies, among all retail verticals and through every business segment, including the world’s largest retailers.

With traditional fraud-prevention tools and methods, large retailers were left with two unenviable choices: Either operate with extreme suspicion, declining orders that they fear might be fraudulent, or provide a frictionless customer experience, erring on the side of shipping questionable orders, thereby opening themselves up to exploitation by cybercriminals who have built global operations to commit ecommerce fraud at scale.

The first choice leads to false declines, holding back legitimate orders that should be shipped, and leaves legitimate customers feeling like criminals. The second choice puts retailers in the position of facing financial ruin. Neither, obviously, is good.

As the digital transformation races forward, large omnichannel retailers are concluding that innovative fraud protection is a key to building the kind of customer experiences that consumers have come to expect in the Amazon era. The constantly learning machines behind the guaranteed form of protection, are able to sift good orders from bad and dramatically reduce the number of false declines.

It’s a model that Signifyd, obviously, has believed in since the early days of the company. Now it seems other strong voices are joining in the chorus.

Contact Mike Cassidy at mike.cassidy@signifyd.com; follow him on Twitter at @mikecassidy.

 

 

 

 

 

 

Mike Cassidy

Mike is lead storyteller at Signifyd. A former journalist and a retail geek, he covers ecommerce and the way technology is transforming digital commerce. Contact him at mike.cassidy@signifyd.com; follow him on Twitter at @mikecassidy.

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