Retailers moving into the online space for the first time face risks that don’t exist in the bricks-and-mortar world, says Brendon Williamson, general manager of business development at payment services provider PayGate – and they need to ensure they are well protected.
Merchants selling virtual goods like airtime or vouchers are the most vulnerable, he says. “I’ve quite literally seen people start up a website selling airtime and go bang within a fortnight. The more quickly your product is delivered, and the easier it is to resell, the more careful you have to be about your payment security.”
“Different kinds of business may attract different kinds of online threats, but nobody is completely safe,” says Williamson. “Even if you’re selling a physical product, somebody may buy goods with a stolen card, have them shipped to a temporary address and then to resell them before anybody’s worked out what’s going on.”
This is not particularly hard, says Williamson: “Even if a card holder blocks their card the moment they know it’s stolen, there still remains that initial window period. It is almost impossible for a database to keep up with the millions of cards and millions of transactions happening around the world every second.”
Websites that use affiliates to drive traffic are susceptible to their own set of scams, as are accommodation establishments. “Even if you don’t sell anything more valuable than cupcakes, you may find your site targeted by criminals who run through lists of stolen credit cards to make sure they’re working before selling them on,” he says. “The financial loss may not be that big, but it can take a lot of time and resource that small business don’t have to sort things out.”
The first step to take in protecting your online business is to know your customers and their buying habits if possible, says Williamson. “A simple welcome call once they’ve registered, if your volumes allow it, can tell you a lot. And obviously the longer a customer has been with you and the more often they’ve made purchases, the more you can trust them. Don’t automatically relax the rules for accounts over a certain age, though – fraudsters are wise to that one. “
Limiting your exposure by imposing a transaction limit for new customers, or waiting a day or two before shipping, can also help, he adds. The art to managing your online risk is ensuring you are not over exposed, but at the same time gaining maximum return from your valid customers.
Reputable payment gateway providers should offer extra levels of fraud protection, he says. “It’s essential to have a conversation with your supplier about what they offer, what risks they can protect you against and whether they can give you access to more specialised third-party protection services if your need warrants it.”
Whatever you do, he says, don’t just set up a website with a shopping cart and assume all will be well. “Fraudsters are smart, brazen individuals – they’re not be underestimated.”
Too many payment methods to choose from? Ask your service provider
Payment service providers (PSPs) should be equipped to help online merchants choose the best payment methods for their business needs as the market gets ever more diverse, says Brendon Williamson.
“The payments landscape has never been more volatile or complex. Between the traditional web payments and mobile, it seems like there’s a new payment method on the market every week. Online retailers can quickly get overwhelmed trying to prioritise integration schedules and decide which payment products suit them best. It’s all about attracting new customers, keeping the existing ones and making the purchase process as seamless as possible”.
Many merchants have been bitten by products that are introduced with great hype but never gain significant market share, adds Williamson. “Someone launches a funky new way to pay and everybody is enthusiastic for a few months, but then it fades away. Merchants need to invest time, skills and capital to enable a new payment solution and if it never gets off the ground, that investment is lost.”
But merchants also can’t afford never to change: “New ways to pay and get paid are a fundamental part of the online realm,” says Williamson; “you can’t just ignore new payment methods. Instead, there is a series of questions you need to ask as part of an assessment process.”
For example, says Williamson, “you need to ask: Is it safe? Is it reliable? What percentage of the market will actually use it? How many of your existing customers will use it? How is that payment method backed up by support, marketing and funding for future development?”
“These are important questions, but constantly researching and assessing new payment options takes time that merchants don’t really have. Your PSP is in the best position to take the lead in doing the research and providing the advice businesses need to stay competitive.”
At PayGate, says Williamson, “we’re always scanning the market to see what new developments are out there and how they might be able to help our merchants. In the past there was a simple choice between credit cards and direct EFT, but now the customer can also choose to pay using debit cards, vouchers, virtual wallets and an array of mobile payment methods.”
Most recently, adds Williamson, “we have decided to offer the Zapper mobile payment service as well. We believe it has real potential because it offers excellent security and reliability for merchants and their customers alike, and it has very strong backing and support.”
Williamson says Paygate will continue to research and assess new payment methods as they appear. “Our goal is remain the leader in offering our clients access to the best menu of reliable, proven payment methods that will help to maximise their sales. We encourage any merchant who’s feeling unsure to contact us for advice.”
PayGate is a payment service provider that offers online retailers simple, effective services to accept electronic payments, which can be a very complex part of running a business. It offers merchants connections to multiple acquirers and fully manages the technical connections and relationships with the banks, card, and payment networks. It also offers risk management services with payment notifications,settlement reports and fraud protection. PayGate is linked to more than 70 banks in over 30 countries and has been providing secure, reliable online payment services since 1999. Its immediately accessible services help businesses of all sizes stay on top of the continuously evolving world of online payments. For more information visit www.paygate.co.za