Seamless and Secure: Navigating the Future of Commerce

Two large-scale trends are coming to a head with merchants at the crux: the digitization of payments and increasing card-not-present 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, while more consumers (and fraudsters) move to the online/digital channel. During 2015, CNP fraud—which is primarily e-commerce transactions but also includes some mobile payments—increased 215 percent¹ and, according to Aite Group, CNP fraud is likely to double to $6.4 billion by 2018.

“Today, the lines are blurring between brick-and-mortar and virtual commerce,” says Arvind Ronta, director of commerce, security and 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.”

“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.” —Arvind Ronta, Discover

Data Open Doors

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 more abundant than ever, especially given the varied methods with which consumers can interact at brick-and-mortar locations as well as online and via their mobile devices.

“Merchants are looking for better targeting and marketing attribution,” Ronta adds. “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 explains, “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 engage customers with loyalty incentives, giving its partners the ability to leave consumers feeling like they are receiving personalized attention from retail brands. For example, this data are used to support Discover’s online rewards portal for cardholders, in which they can access offers and deals from top merchants while shopping.

“Discover is uniquely positioned to help its partners both satisfy the growing demands of consumers and fight online fraud,” Ronta says. “Due to our unique infrastructure, we can work with prepaid program managers, issuers, merchants and cardholders, among others, to create innovative solutions—meaning we can help bridge the gap between consumer data and consumer engagement.”

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 expect seamless payment experiences that remove any friction from the process. Whether customers want to pay by tapping their smartphones, or with a chip card at a mobile point-of-sale terminal in the store, or within a merchant’s app while shopping on the go, it’ essential that merchants are ready to complete a transaction easily. Those that effectively support mobile payments at this early stage will benefit greatly as consumer adoption swells, Ronta predicts. Projections from Aite 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 multilayered approach to security, according to Ronta. For example, when merchants integrate fraud protection measures for their in-store environments and mobile/online channels (such as their Websites and mobile apps), they’re bringing greater protection to payments across channels.

“To battle online fraud, we offer holistic fraud solutions that balance merchant and cardholder expectations,” Ronta explains. “We approach fraud solutions in a layered manner, so they work in tandem to provide multipoint 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.”

Related stories: 

• Connecting the Dots between Online Offers and In-Store Purchases
• Report: Prepaid Fraud Remains Low; Other Fraud Worries Increase
• Report: Digital the New Front in Fraud Fight

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 + PYMNTS.com Global Fraud Attack Index, Q2 2016