You’ve found your way to the Allied Wallet blog because you want to learn how to increase your cybersecurity, meaning how to protect your personal information and assets that can be accessed online. This can be accomplished in many ways, but we’re going to talk about cybersecurity with a specific regard to eCommerce fraud protection. Before we move forward, let’s explain what we mean by eCommerce.
What is eCommerce?
The way we refer to eCommerce is pretty much what it denotes—any financial transaction made electronically online. It covers a broad range of markets and transactions:
- Purchases sent through a company (like Amazon, eBay, or Etsy) that acts as an intermediary between a customer and a business or individual vendor.
- Direct transactions with a private business (such as Target or Macy’s) offering their own services or goods online.
- All of these in addition to new and developing eCommerce markets, including money sent through apps and services paid for entirely through smartphones.
When is eCommerce Fraud Protection Most Important?
The most popular services like Amazon are under a lot of scrutiny and will very often have incredibly thorough eCommerce fraud protection out of necessity and financial capability. As much as Amazon would like to be a monopoly, not everybody shops exclusively through the company all the time. Niche products may not have made it to the site, or seasonal changes might encourage shoppers to look elsewhere online.
For instance, during the busiest shopping periods of the year, huge companies will have slower shipping rates. This opens the door for other online retailers—ones that provide more attentive service with faster shipping or more personalized digital gift cards. On the other hand, however, they might not have as many security measures in place for strong eCommerce fraud protection. The consumer will often shop on these sites as if they had the same amount of protection as a much more vetted eCommerce business like Amazon.
The Dangers of Unencrypted Online Payments
At its most basic, an online purchase with a credit card involves a few steps with their own unique security risks. It must be inputted (sometimes on public or compromised devices), encrypted, and then transmitted. Smartphone payments have their own processes, but typically function by using a credit card stored in the cloud. This is in addition to vulnerabilities created around issues like billing fraud (charging the wrong amount) and shipping fraud (charging unaware consumers for shipping and receiving fraudulent merchandise).
Sending your credit card information online through an untrustworthy website can be unsafe for many reasons. Simply, some sites might not have thorough encryption measures to protect your financial data. Encryption, in this case, refers to complex measures that make online data unclear or unreadable to outsiders. Without strong encryption as a foundation of eCommerce fraud protection, skilled digital intermediaries are allowed to tamper with and potentially hijack your spending information.
Another danger of unencrypted eCommerce transactions is known as phishing. Websites can be setup to accept payment information for the sole purpose of stealing your information. They can take your money from your attempted purchase for goods, use your financial data further down the line, or even sell and trade it with other phishers who hope to scam you as well.
Tales of the Encrypted: Bitcoin
People are currently working on ways to make purchases with eCommerce fraud protection built into the currency. One example you may have heard of is Bitcoin. Many consider this to be the digital equivalent of cash, as it allows for direct purchasing without intermediaries. Even if you are sending your money online, there is still interaction with a bank or credit card company, both of which will often charge for the use of your money.
The overall drawback of Bitcoin, however, is that it is esoteric and hard to understand for most people—so much so that very few businesses and people take the time to use it, making it a very uncommon payment method. It’s unfortunate because Bitcoin is very safe and has an intriguing background; for instance, it relies on individuals and businesses who help process the encryption of Bitcoin exchanges.
Yet, until Bitcoin (or an equally encrypted payment method) surges in popularity, we’re going to have to deal with current methods of eCommerce fraud protection and improve upon them. This includes payment card industry (PCI) data security standards and recent developments like chip cards.
Cybersecurity and eCommerce Fraud Protection
There are many types of eCommerce fraud that both online businesses and internet shoppers need to protect themselves from. Recent well-known examples include the major data breaches caused by hackers at major corporations like Target, Home Depot, and more.
Your financial institution and banks are typically responsible for protecting your funds at the end of the day. However, they are struggling to keep up. JP Morgan Chase, for example, was a victim of a hacking attack in 2014. Hackers are incredibly intelligent and are implementing new strategies that evade established security measures. Many groups, from large financial corporations to credit unions, are putting money and political motion behind cyber threats.
Trends in thought are echoing this need for eCommerce fraud protection with specific regards to banking. A 2015 independent survey of over 1000 people by GFI software reported that 46% of their respondents had been victimized by a cyber crime in the past year. Business owners are scared, too, as 88% of respondents think a single cyber attack would have a huge negative impact on their business, with 6% of the overall people surveyed thinking it would completely sink their business.
EMV Cards are a Small Step
While the figures above seem bleak, businesses are making some strides towards increasing security. Credit cards with digital chips installed have made a recent splash to combat the many ways financial information can be stolen from a card’s magnetic strip. These chips encrypt your card data while transmitting it over to the vendor.
Unfortunately, these chips currently do little for eCommerce fraud protection. They are great for physical security, especially on the merchant end as it helps protect from fraudulent charges. However, consumers are still entering their credit card information online in the same manner as they did before the technology.
Don’t Wait for eCommerce Fraud Protection
eCommerce fraud seems to be growing. Hundreds of billions of dollars are stolen annually from cyber fraud alone. It’s been proven that most credit card fraud occurs in the United States; according to Barclays in 2015, the U.S. is responsible for 47% of the world’s credit card fraud.
Many companies simply are not prepared to combat fraud in its increasingly complex form. eCommerce businesses, according to LexisNexis, had fraud as a percentage of total revenue grow almost 75% between 2013 and 2015. LexisNexis also shared that online-only retailers are much more likely to be hit with chargebacks.
Both large and small companies are especially vulnerable during busy times, like the holiday season. This is partially due to resources being strained during that time of year, but it also is due to lack of preparation. It’s hard to predict the growing demands on their digital retail services every holiday season and criminals are more than willing to jump on those security flaws.
Popular Digital Wallets are Risky
Another oversight when it comes to eCommerce fraud protection happens when consumers rely on digital wallets like Apple Pay and Google Wallet. As these technologies are very new, they have many more security risks. LexisNexis, again, mentions that “alternative payment methods” like PayPal and Venmo are growing percentages of overall fraud. This is often due to lack of basic eCommerce fraud protection like encryption methods on the smartphone itself or when transmitting financial information. Buyers and sellers are both negatively affected by fraud and, because this is new territory, the government is unsure which entity is to blame for security oversights.
Exciting eCommerce Fraud Protection Developments
Fortunately, there are exciting new steps forward in the eCommerce security world. Companies like Omnichannel are developing ways to protect data stored and sent in the cloud. Exciting new algorithms are detecting fraudulent purchases more accurately than ever. Independent identity proofing verifies that users are authentic and not making fraudulent charges. We hope to update you on these exciting developments as they become more widespread and available.
Fraud Prevention Tips
For now, the best tip is to stay educated on the developments in the industry and do the best you can to maintain eCommerce fraud protection. As a consumer, you can consider shopping in person with a credit card chip when possible. Also, shopping in the off-season, when businesses aren’t taxed, is to your benefit. You also won’t find yourself making shopping choices that go against your instinct.
On the business side, merchants will need to weigh instant verification with the results they produce. They also need to realise that increased attention to security during the holiday season is becoming more of a necessity than ever.
One Solution: Invest in Allied Wallet
We’ve mentioned the well-intentioned, but ultimately inadequate, ways that popular digital wallets, Bitcoins, and credit cards meet the needs of modern eCommerce consumers. The cybersecurity experts here at Allied Wallet provide state of the art eCommerce fraud protection services that address the multiple demands of the current marketplace. We have solutions for individuals who want to safely make online purchases and merchants who want to accept online payments without incurring fraudulent charges and putting their customers at risk. It’s our job to stay on the cutting edge of online security, providing simple and affordable options that keep you secure when making and accepting online purchases.
Shop Securely with eWallet
Allied Wallet offers a free digital wallet solution called eWallet. This free service securely stores your payment information using PCI-DSS Level 1 certified security and a SHA-256 SSl encryption. Once stored and secured, you never have to enter that payment information again as long as you can log into your eWallet account. You can access your account online or through an app when you’re on the go.
This has a few benefits. You can make purchases without entering your financial and personal information. No matter if you’ve been attacked by phishing software on your computer, don’t feel secure where you’re entering your info, or have to buy something and left your physical wallet at home, the eWallet lets you shop securely. By not having to enter all of your information and only having to log into the eWallet, you can also shop more efficiently online. Over 100 million customers have trusted our efficient and secure eWallet service.
Merchant Services for Your eCommerce Venture
On the business owner side of eCommerce fraud protection, Allied Wallet also has a range of online merchant services to aid in the security process. For starters, we can set up a secure eCommerce transaction gateway quickly and efficiently. Twelve hours after receiving the necessary information in your application, Allied Wallet can protect you from fraudulent attacks while accepting money online from around the world. This means you don’t have to choose between security and convenience no matter where you house your business.
These solutions let you accept credit cards online tailored to the size and business model of your company. What this means is that Allied Wallet can offer as much security as you think you’ll need for your business to thrive. Furthermore, we can help you accept payments in over 164 currencies from 196 countries, in addition to processing ACH payments. Besides providing eCommerce fraud protection that can save your business, this helps you save money by bundling transactions and strengthening brand loyalty by letting customers feel secure during the easy purchasing process.
Contact Allied Wallet to learn more about any of these services or with questions about the pricing of our security features for your business. You can also ask us about our continuing mission to make eCommerce fraud protection obtainable for as many people as possible.