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Cross Border E-commerce: Challenges and Opportunities. Howard Bell, Head of Online Payments, Barclaycard Internet Retailing ‘Payments & Fraud’ 11 th February 2010. Challenges and Opportunities. european eCommerce trends market opportunities and challenges for retailers beating fraud.

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Cross border e commerce challenges and opportunities l.jpg

Cross Border E-commerce:Challenges and Opportunities

Howard Bell,

Head of Online Payments, Barclaycard

Internet Retailing ‘Payments & Fraud’

11th February 2010


Challenges and opportunities l.jpg
Challenges and Opportunities

  • european eCommerce trends

  • market opportunities and challenges for retailers

  • beating fraud


In eu markets where internet penetration is low e commerce is growing rapidly l.jpg
In EU markets, where internet penetration is low, e-commerce is growing rapidly …..

European e-commerce: online retail sales

(Source: Forrester)

€ millions

Source: Forrester Research 2008


The european e commerce landscape l.jpg
The European E-commerce Landscape

The Headlines

  • The European eCommerce payments market is worth €230 billion; €95 billion from the UK

  • Visa and MasterCard are top 2 EU payment methods; PayPal is 3rd

  • There are approximately 500,000 e-commerce merchants across the EU – and 1/3 of these are internet only stores

  • France, Spain and Italy are the fastest growing markets but currently have low internet penetration

  • PCI DSS is a Global (and hence pan-European) requirement

  • Increasingly Tier 2 EU merchants are seeking a hosted paypage (acquiring and gateway combined)

Source: Barclaycard Proprietary Research, 2010

Global Payment Acceptance Barclaycard SmartPay – EU Marketing & Roll-out – 07.01.2010


European shoppers expect choice l.jpg

ELV DE

iDEAL NL

Maestro/Solo UK

Carte Bleue FR

European shoppers expect choice

Simple payments?

“Which payment method (s) do you prefer when you buy products online?*”

40%

60%

35%

26%

51%

51%

19%

34%

Credit card

26%

3%

3%

56%

20%

14%

43%

43%

Electronic bank transfer

24%

43%

57%

3%

14%

10%

14%

17%

Debit/payment card

23%

35%

16%

22%

14%

26%

11%

11%

PayPal

19%

5%

17%

31%

2%

19%

37%

13%

Cheque/accept giro

10%

3%

3%

10%

32%

19%

16%

24%

Cash

Source: Forrester Research Inc

* Forrester allowed Consumers to select preferred methods and allowed multiple votes (hence totals>100%)


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Opportunities are real; challenges need active management

  • New Markets

  • New Payment Streams

  • New Shoppers

Opportunities

Challenges

  • PCI DSS

  • Fraud & Chargebacks

  • New Payment Methods


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International CNP Fraud*

International CNP fraud, Nov 2009

  • Headlines

  • Decline in CNP Fraud (-13%) vs 2008

  • CNP Fraud still 60% of total fraud

  • Top 5 buyer countries are US, Spain, Ireland, Cyprus and France

  • Mix skewed towards Credit but Debit increasing

  • (Credit 48% , Debit 40% , Charge 12%)

* as at Nov 2009


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Barclaycard’s Approach to Beating Online Fraud

  • Industry-Leading Performance–losses 40% lower than UK average

    • Robust vetting and advanced risk analytics

  • Partnership approach with customers

    • Active collaboration with card schemes to identify & block fraudulent buyers

    • Leading Influence over Risk Policy e.g. PCI DSS

  • New Propositions

    • “Fraud Reporter” – online daily file (PGP) to prevent dispatch to fraudsters


  • Your questions l.jpg

    your questions?

    Confidential


    What is payment card fraud l.jpg
    What is Payment Card Fraud?

    • Involves the use of a credit/debit card without the consent of the genuine cardholder

    • or the account itself has been set up fraudulently.

    • Fraud types include:

    • CNP Fraud – merchant, retailer or service provider has no physical access to payment card.

    • e.g. Internet / Mail Order / Telephone / Fax

    • Counterfeit Fraud (cloned / skimmed) – A plastic card that has been printed, embossed or encoded so as to purport to be a genuine payment card issued with the authority of the genuine issuer

    • Identity Theft / Fraud – Where someone uses your personal information such as name, payment card number or other identifying information without your permission to commit fraud or other crimes

      • Mail Interception / Social Engineering / Phishing / Malware Attacks / Raiding Bins

    • Other Fraud Types – Lost & Stolen / Non Receipt of Mail / Application Fraud


    Slide11 l.jpg

    What is acquiring fraud?

    • Collusive

    • 1st Party Fraud by BPA Retailer

    • Genuine

    • 3rd Party Fraud at BPA Retailer

    Fraud Occurs

    at Retailer

    Chargeback right..

    • Shopper has rights

    • Issuer has no chargeback right

    • Where cardholder authentication exists - Chip & PIN or 3DS)

    • Issuer Chargeback

    • right exists

    • CNP / No 3DS

    • Card Present - No supporting evidence, signatures etc

    • Shopper has rights

    • Issuer has no chargeback right

    • Where cardholder authentication exists - Chip & PIN or 3DS

    • Issuer Chargeback

    • right exists

    • CNP / No 3DS

    • Card Present - No supporting evidence, signatures, verification etc

    Loss..

    • Fraudulent funds recovered as a result of freezing bank accounts & diverting pdq

    • Acquirer loss.

    • No loss to BPA or retailer

    • Issuer Loss

    • Retailer loss

    • Loss to BPA = Retailer

    • unable to pay chargebacks

    • Fraud Debt owed to BPA. Resulting from fraud activity at the retailer.


    Customer recruitment best practice l.jpg
    Customer Recruitment – Best Practice

    • Online customer additional information – Best practice

    • Customer service number

    • E-mail address to contact company

    • Statement on risk & fraud controls

    • Delivery methods & timings

    • Age verification methodology (age restricted goods & services)

    • Refund & returns policies

    • Privacy statements (permissible uses of customer information)

    • Depending on the type of customer, perhaps a terms of service and / or acceptable use policy


    Customer recruitment best practice13 l.jpg
    Customer Recruitment – Best Practice

    • Trading information

    • Nature of goods & services

      • Design of home page & location of billing pages

      • Price patterns

      • Merchant location (Physical & Legal)

      • Ave or projected turnover

      • Ave or projected refund volume & refund policy

      • Ave or projected chargeback or fraud rates

      • Disclosure of all payment mechanisms offered

      • Disclosure of all sales channels inc all URL’s or referral sites

      • Check validity of telephone numbers / email addresses / listed [personal & other contact information