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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

Cross Border E-commerce:Challenges and Opportunities

Howard Bell,

Head of Online Payments, Barclaycard

Internet Retailing ‘Payments & Fraud’

11th February 2010

challenges and opportunities
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
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
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

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%)

opportunities are real challenges need active management
Opportunities are real; challenges need active management
  • New Markets
  • New Payment Streams
  • New Shoppers

Opportunities

Challenges

  • PCI DSS
  • Fraud & Chargebacks
  • New Payment Methods
international cnp fraud
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

barclaycard s approach to beating online fraud
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

your questions?

Confidential

what is payment card fraud
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

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
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
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