Process – Affiliate Marketing Programs

Pat Phelan is Chief Customer Officer at GoCardless.

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In difficult economic periods, marginal gains matter more than ever to businesses. A few cents sliced off the cost of production here, or a slight uptick in sales there, can make the difference between positive and negative cash flow.

But where should businesses be looking for these gains? One area of priority for every leader today is payment processes. As a disclosure, my company GoCardless is one provider of payment processing solutions.

An optimized payments operation can both cut costs and unlock trapped revenue. The multidisciplinary nature of modern payments gives businesses plenty of scope—the checkout experience, the payment methods and the partners used to process transactions are all pockets of potential gains.

Better still if you hone in on one area where the impact from improvement ripples through other payment functions.

Fraud management is one such area.

What is the cost of getting it wrong?

Too often, we frame fraud management in terms of mitigating risks. In the payments world, this means stopping bad actors from making payments. Doing so means fewer chargeback requests and lesser chargeback penalties (these can range from $10-$100 per transaction.) It also means less time spent processing—or challenging—chargebacks while striving to maintain friendly terms from your acquiring bank or payment processor.

In McKinsey’s “2022 Global Banking Annual Review,” banks are advised to aim to derive more than 50% of banking income from payment and distribution fees; leading banks, the report projects, will derive more than 20% of revenues from nonbanking sources.

Then there are the “hidden” costs.” A successful chargeback essentially cancels out the payment but does not cancel all the costs that a business has incurred, such as the marketing efforts to acquire the customer, the processor’s commission and the fulfillment of the product.

So a business loses twice, once for the lost revenue from the “sale” and again for the penalties and administrative burden of managing the chargeback request. Recent estimates reveal that e-commerce businesses lost $41 billion to fraud in 2022.

Yet in a recent research conducted in May 2022 by Attest on behalf of my company GoCardless, while companies spent on average 6.3% of their revenue managing fraud, U.S. businesses reported only recovering an average of 35% of chargebacks.

Businesses seem to be aware of this risk. The same survey revealed payment fraud as the number one fraud threat among surveyed respondents, more concerning than data breaches and website hacks.

How can leaders approach this hurdle strategically?

Businesses must be careful not to become over-zealous in fighting fraud, either. Be too rigorous, and you might “catch” genuine customers, who will then go on to spend with a competitor instead. Today’s consumers are used to speed, and burdensome security measures can leave them frustrated enough to give up on the payment.

Herein lies the challenge for business: How to balance fighting fraud with creating a secure and sleek customer experience that encourages conversion?

Part of the answer comes from the payment methods you offer.

A third of the sample we asked said they believe that credit and/or debit cards are most susceptible to fraud…and for good reason. We have them on us most of the time, either physically in our wallets or stored on a payment app. Our convenience is a thief’s opportunism. Conversely, bank-to-bank payments (e.g., bank debit, Direct Debit, open banking) tend to work on a “set and forget” basis or require a bank account login first.

Businesses face even more challenges than just stopping fraudulent payments. Take subscription businesses that continually wrestle with the issue of attempting payments from expired cards. Each retry adds operational cost—and if the customer can’t be reached, they risk involuntarily churning.

What strategies are leading the way in this new era?

Almost nine in 10 decision makers in our survey agreed that the answer to managing payments fraud lies in technology. There is, of course, nothing new in this. 3DS1 dates back to 1999, while the protocols of 3DS2 have been widely adopted. The higher grade of payer authentication represents a huge leap forward in combating fraud. But it is also a bit of a sledgehammer tool.

What businesses really need is adaptability, the power to set their own fraud thresholds and keep adjusting these based on real-time data. Here are four strategies leaders can leverage to better protect their payments process against fraud.

1. Leaders should collect payment data that monitors fraud patterns across product, geographical, payment scheme and demographic segments.

2. Many leaders opt to leverage machine learning (ML) capabilities, which can be leveraged to use that data to configure the optimal thresholds based on a predefined risk appetite.

3. Businesses should also seek to adopt some means of detecting when a fraudulent payment is underway, stopping it in its tracks.

4. Finally, there is a crucial need to adopt some sort of reporting mechanism that provides analysis and a feedback loop back into the software.

With the right strategies, leaders can optimize their payment fraud management today.

The right technology can reposition fraud management as a revenue-generating activity,

I hope this article offers some strategies to help leaders ensure a smooth checkout experience that drives higher conversion of genuine customers. With the right strategies in place, you can enhance your payment processes in order to shift your fraud management approach from one of risk management to one of revenue generation.

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Digital identity verification is a critical step in customer onboarding, especially for businesses operating in highly regulated industries such as financial services or payments.

However, the traditional methods of identity verification, such as a person reviewing government-issued IDs or conducting manual background checks, can be time-consuming and expensive. Onboarding is an opportunity for businesses to make a strong first impression, but those methods can lead to poor user experiences and customer abandonment. Yet if onboarding processes are not well-designed, they can open the door for fraudsters and lead to significant financial losses.

In the current economic environment, companies are striving to onboard the right customers at the right costs. That requires help from all areas of the business, and it’s where marketing can play a role.

Marketing is all about understanding customer needs and behaviors and using that information to create strategies that help businesses achieve their goals. By applying marketing principles to identity verification at user onboarding, businesses can make the process more efficient and create positive customer experiences that build trust, enhance the brand reputation and reduce abandonment.

When responsible, ethical marketing intersects with identity verification at onboarding, customers and businesses can reap the benefits. Here are four ways that can happen.

1. Simplifies the verification process

The marketing team can help its colleagues simplify identity verification by providing clear, concise instructions to users so they know exactly what to do and are more at ease during onboarding. That can be especially helpful for those who may not be familiar with the verification process or who may have limited access to technology. The right tone and voice from marketing can help a user through a daunting process while leaving a positive association with the brand.

Recent research from Trulioo, for instance, found that 53% of payment service providers consider empathy — showing an understanding of customer needs, concerns and values — a top factor in building trust through identity verification. The same research showed that 92% of consumers consider empathy to be as important or more important during onboarding, compared with how they felt two to three years ago.

Marketing also can support product design teams as they create intuitive user interfaces that guide customers through the verification process step by step. For example, businesses can use visual cues, such as progress bars or check marks, to indicate to customers their progress in the verification process. Those cues can create positive experiences that encourage customers to complete onboarding. When the cues use a visual system that aligns with a company’s brand promise, yet another strong positive association is made between the company and customer.

2. Creates a sense of urgency

Marketing can help create a sense of urgency around the verification process. For example, businesses can use messaging that emphasizes the importance of verifying identity, such as highlighting how it helps prevent fraud.

When it’s appropriate, businesses can use techniques such as countdown timers or limited-time offers to give customers a stronger sense of engagement with the onboarding journey. Offering incentives for completing the verification process can encourage users to continue through the onboarding steps. This may not make sense in all industries, but it can help reduce the number of people who abandon the onboarding process.

3. Builds trust

Identity verification is a critical element in building trust between a business and its customers. By verifying digital identities, businesses create a safer environment for customers.

Marketing can convey that message clearly throughout onboarding to enhance the brand reputation and ensure customers understand exactly why they’re providing information for verification. The messaging can emphasize the security benefits or leverage social proof, such as customer reviews or testimonials, to demonstrate the process is secure and efficient.

That type of communication can pave the way for positive user experiences and customers who believe the company is taking steps to ensure their security and data privacy. When companies showcase their commitment to a secure digital environment, customers are more likely to trust the process and provide the necessary onboarding information.

Businesses also can use branding elements such as logos or color schemes to create a consistent and recognizable user experience. That can help reinforce the business’s brand identity and create trust with customers.

4. Builds personalized and customized experiences

Businesses can leverage marketing tactics to personalize and customize identity verification workflows. When a company understands its customers’ needs and behaviors, it can tailor onboarding steps to each person, striking the balance between security and meeting consumer expectations for speed and convenience.

Personalization can also give people the feeling that a business really knows them, such as when it greets them by name or uses messaging specific to their industry or interests. Those nuanced techniques can create more engaging experiences that encourage users to complete the verification process.

Marketing forms the foundation of long-lasting relationships

Harnessing best-in-class marketing techniques for the identity verification process can create a more positive onboarding experience and strengthen the relationship between businesses and their customers.

When businesses truly leverage this type of holistic approach, they can realize the benefits of increased customer satisfaction, retention and trust. Clear communication, an engaging process and personalized experiences help ensure businesses onboard the customers they want while building trust and confidence in the brand.