High-Value eCommerce Raises Security Risks
Online payments are easier and more convenient today than ever before. In fact, the trend of buying and selling services or products on the internet isn’t slowing down anytime soon; it’s only getting more and more high-value. Follow along as we explore how high-value eCommerce has evolved over time, and what the future of security looks like for eCommerce down the road.
Shopping online for high-value items – like a new car – has become a regular part of our everyday lives. Gary Hoover, eCommerce expert, found that items with a heavier price tag have greatly increased from 2000 to 2014. As shown in the graph below, some examples include furniture or home furnishings and electronics or appliances – both of which have increased at a compounded rate of 25.5 percent and 24.2 percent, respectively.
As online transactions increase in value, the risk of fraud also increases. To ensure a safe, satisfactory eCommerce experience for both the consumer and the supplier, a secure process needs to be put in place, protecting against identity theft and payment fraud.
Surprisingly enough, fraud isn’t at the forefront of everyone’s mind as they shop online. The stigma of shadiness and buying from unknown merchants has been displaced over recent years. Consumers are much more comfortable with entering their credit card information or even bank information to merchants they deem to be secure enough. Unfortunately, this impression of security doesn’t extend to reality.
The evolution of eCommerce
Fun fact: one of the first eCommerce transactions was made in 1982. Now, the field is growing by as much as 23 percent year-over-year. Throughout the 80s and 90s, the biggest names in the electronic commerce industry began their legacy as they improved internet connectivity and encouraged widespread consumer and business adoption. Let’s go back in time to where it all started:
- 1979 – Michael Aldrich invented online shopping by connecting a modified TV to a transaction processing computer.
- 1982 – Boston Computer Exchange launched as the world’s first eCommerce company, a marketplace for selling used computers.
- 1994 – Dell.com launched as a static page. Also, the first Pizza Hut pizza was sold online.
- 1995 – Jeff Bezos launched Amazon as a platform for books. AuctionWeb – now known as eBay – also came into existence. Meanwhile, the Presidential bank was the first to launch online banking.
- 1998 – PayPal was introduced.
- 1999 – Alibaba Online was launched with more than $25 million in funding.
During this time frame, Visa and MasterCard lost $750 million combined due to credit card fraud. Security breaches became a common problem as online payments grew in frequency and volume. As a solution, credit card companies established the Payment Card Industry Data Security Standard (PCI DSS) as a set of security standards.
Fast forward to 2019: data breaches are still occurring, and fraudsters are becoming even more sophisticated. We now face security challenges that call for an advanced solution, with more imperative than ever before.
High-value eCommerce needs high security
While eCommerce makes life easier for customers, it also reveals gaps in security that fraudsters are eager to exploit. Jewelry purchases are one example of high-risk, high-value eCommerce. Account fraud is 10 times higher in jewelry than in other industries – the average company pays nearly $2,000 to repay one fraudulent transaction. As a result, companies heavily blacklist accounts, sometimes leaving legitimate customers unable to regain access.
The average company pays nearly $2,000 to repay one fraudulent eCommerce transaction.
For a long time, the eCommerce industry has focused more on the customer experience than on security. And for good reason: 69 percent of all online shopping carts are abandoned, a quarter of which are purely due to a frustrating checkout experience. But high-value eCommerce is an entirely different game. As Forbes contributor Alastair Johnson writes, “the efficient payment experience belies the fact that the storage and use of customers’ digital identity is in crisis.”
Digital identity verification and security is becoming increasingly crucial across industries, but it’s especially important for high-value eCommerce transactions. The costs of ignoring security are simply too high.
What high security looks like
So, when consumers are buying luxury items online, security risks start to outweigh the risks of a negative user experience. Additional steps to verify a customer’s identity and mailing address, while sometimes time-consuming, are absolutely crucial to ensuring a secure checkout and satisfied customer.
“The efficient payment experience belies the fact that the storage and use of customers’ digital identity is in crisis.”
Fortunately, not all forms of identity and address verification have to be cumbersome. Through Urjanet’s platform, businesses can offer a way for customers to link their utility accounts in one simple step, producing a verified record of name and address in minutes. The best part is: utility account data can offer legitimate customers – who may have previously suffered from account fraud – a second chance to verify themselves and rejoin the marketplace.
eCommerce today looks dramatically different from how it did 40 years ago. Online transactions are growing larger and larger in value – if security measures don’t catch up, the price of fraud will become too high to bear. To learn more about enhancing your identity verification with direct-from-source utility data, talk to one of our data experts today.
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About Amy Hou
Amy Hou is a Marketing Manager at Urjanet, overseeing content and communications. She enjoys writing about the latest industry updates in sustainability, energy efficiency, and data innovation.