The State of Retail Data Breaches & Rise of Security-savvy Customer
Businesses can succeed in an evolving e-commerce space with robust solutions that help detect fraud proactively and preserve trust of security-savvy customers.
Technological advancements and innovations in e-commerce space have redefined online shopping experience for customers. While businesses are innovating to offer personalized, friction-less experience to their customers to build trust and loyalty, customers are becoming vigilant about security of the personal data they share online.
Data Breaches Erode Customer Trust
Personally identifiable customer details captured during sign-up, log-in or checkout, allow businesses to offer personalized shopping experience to their customers. Businesses harness this data to improve their business strategies according to changing customer preferences. However, this same data increases the attack surface for fraudsters, making businesses vulnerable to targeted attacks and erosion of customer trust. According to IBM, the full cost of a mega breach (1 million to 50 million records) for businesses is as high as $350 million at a global average of $3.86 million. Apart from financial losses, businesses also face long-term reputational losses and customer churn.
According to the 2017 Data Breach Year-End Review released by the Identity Theft Resource Center (ITRC), the year 2017 was a runaway year for identity frauds when data breaches rose 44.7% over 2016. While in the U.S. alone three-quarters of retailers faced a data breach in the last year, as reported by the Thales 2018 Data Threat Report. This phenomenal increase in retail data breaches has exposed personally identifiable information (PII)—phone numbers, shipping addresses and credit card details—making customers increasingly vulnerable to card not present (CNP) and account takeover (ATO) frauds. As reported in the 2018 Identity Fraud Study from Javelin Strategy & Research, identity frauds hit 16.7 million customers in the US with ATO increasing 120% in 2017 over the previous year and CNP becoming 81% more likely than PoS fraud.
Increased awareness about data breaches have made today’s security-savvy customers more careful about who they shop with online. PayPal’s recent research provides insights into customer preferences in the retail e-commerce space. According to this research, 73% respondents rated security higher than the convenience of shopping online. This underscores the fact that a large section of customers trust merchants that ensure safe authentication and checkout processes. Another interesting insight from PayPal research is that 88% customers are security conscious about where they shop.
Furthermore, European Union’s General Data Protection Regulation (GDPR) directive also mandate businesses to ensure security of sensitive customer information. Businesses are, therefore, obliged to adopt enhanced security solutions that maintain sanctity of personally identifiable customer data.
Apart from that, businesses have realized that to succeed in a digital economic landscape, rife with evolving cyber threats, they must preserve customer trust by striking a balance between security and friction-less customer experience. Businesses can win the game against sophisticated cyber threats only with solutions that help them detect and block fraud quickly.
Simility: Fortifying Business Defenses
Simility, a PayPal service, offers multi-layered defense system that enables businesses to proactively detect and prevent fraud early in its track. Using device fingerprint technology, machine learning, decision orchestration and intuitive workbench, businesses can detect fraud in its early stage, enabling them to achieve the much-needed balance between secure authentication and friction-less customer experience.
To learn how Simility’s advanced fraud-prevention solution is powering businesses to meet customer expectations and build customer trust through superior protection, check out the Ebook – Adaptive Solutions for the New Digital-First Economy or contact us now.
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