san francisco digital identity and commerce tour

Welcome to the San Francisco Digital Identity & Commerce Tour!September 15, 2016

2DIGITAL IDENTITY & COMMERCE TOUR

Agenda9:15 – 10:15 am Opening Keynote: Cyber Threat Trends

with The FBIAdvances in technology have made businesses run more effectively, but also left them more vulnerable to cyber attacks and cyber crime. This presentation will describe the current cyber threats facing businesses, the FBI’s role and response to cyber crime, and recommendations for pre-breach and post breach efforts.

10:15 – 10:45 am

Sales Tax Challenges Facing eCommerce with AvalaraThere are over 12,000 sales tax jurisdictions in the US alone. With every state making up their own tax rules, it’s hard to keep up. In this session you’ll learn about the sales tax challenges facing online merchants, new laws impacting eCommerce, and what you can do to prepare your business.

10:45 – 11:15 am

Identity Verification for Digital Commerce with Whitepages ProFraudsters hide behind their computer precisely because they believe you cannot identify them. And if you are without an identity verification tool, they are right. Learn about how fraud teams works with identity verification data to reduce fraud and speed good transactions to clear.

11:15 – 11:45 am

Extend Customer Lifetime Value with Intelligent Payments Data with VantivMerchants are constantly focused on identifying new revenue streams, increasing customer retention, and streamlining operations. This session from Vantiv examines the frequently overlooked rich data nuggets – response info gleaned from payments processing, account updating, fraud management, and digital wallets – that can all identify critical attributes that can help drive higher revenue-per-customer.

https://www.fbi.gov/

http://www.avalara.com/

https://pro.whitepages.com/

https://www.vantiv.com/


Agenda11:45 – 12:45 pm Lunch with Merchant Q & A

12:45 – 1:15 pm Global Payments Survey with The Merchant Risk CouncilThe MRC will be summarizing results, key findings, and analysis from its 2016 Global Payments Survey. Benchmarking results from the MRC’s Global Payments Survey are a valuable benefit as they help MRC members assess trends on a variety of key performance indicators (KPIs), metrics, and data points.

1:15 – 2:00 pmThe Unique Aspects of Marketplace Economy with UShip, WyzAnt, and HopSkipDriveWe’ll be introducing you to three marketplace companies as they discuss their unique approach to connecting consumers and the providers of services and the payments and risk issues that they face in their daily operations.

2:00 – 2:45 pm Fraud Tools & Trends with HotelTonight, Bolt and EBayIn this panel, three merchants will describe new and evolving fraud attack vectors and the tools they use to combat them. This panel will provide insight from their many years of experience in the industry on how to best choose these tools and determine return on investment.

2:45 – 3:30 pm Closing Keynote: Driving Technology to Fight Child Exploitation with Thorn

While the Internet has allowed us to create many amazing things, it has also introduced a new threat and dimension to crimes against children. In this closing session, you will learn about two programs that Thorn has built to drive technical innovation to fight sexual exploitation of children.

3:30 – 4:30 pm Happy Hour Sponsored by The Merchant Risk Council

https://www.merchantriskcouncil.org/

https://www.uship.com/

https://www.wyzant.com/

https://www.wyzant.com/

http://www.hopskipdrive.com/

http://www.hopskipdrive.com/

https://www.hoteltonight.com/

https://bolt.com/

http://www.ebay.com/

https://www.wearethorn.org/

https://www.merchantriskcouncil.org/


Content

• Risk, fraud, law enforcement• Online sales tax• Emerging payments and security• Global expansion• Identity verification• Big data management• Team structures and tools• Regulatory changes and trends


Who is here?

• 165 registered attendees• Online merchants• Financial services companies• Solution providers• Consultants


The Sponsors


Tom Donlea, emcee

• 3 years @ Whitepages Pro• 7 years @ Merchant Risk Council


Why are we here?

• Growth of this channel• Complexity of our space• Consumer expectations• Global expansion• Organizational changes • Industry trends and regulatory issues


History – Mary Meeker Slides


Goals for Today

• Connect with peers• Share best practices• Hear from expert practitioners• Hear from industry leading solutions• Expand your minds…saving money and

time!


Trivia #1 - Customer Service

• A disgruntled customer recently left this item in a Florida Wendy’s as a prank:A. A garbage bag full of sewageB. GatorC. Box of soiled diapersD. All of the above


Trivia #1 – Customer Service

B. Gator


Trivia #2 - Consumer Trends

• How many states require online sales tax even if a merchant doesn’t have a physical presence in the state?A. 23B. All 50C. 12D. None of the above


Trivia #2 - Consumer Trends

A. 23

What every online seller needs to know about sales taxPeter Horadan, CTO, AvalaraSept 15, 2016

Selling online is key to growth• 57% of US shoppers are buying

online.• $327 billion in online retail sales in

2016.

19

“We don’t want to grow our business” - said no successful company,

ever.

+ 20,000 companies worldwide automate sales tax with

Avalara

Where do you need to pay sales tax?

Nexus, also called “sufficient physical presence,” is a legal term that refers to the requirement for companies doing business in a state to collect and pay tax on sales in that state.

Source: Wikipedia


States finding more sales tax revenueby broadening definitions of nexus

• Quill Corp. v. North Dakota, (1992)– United States Supreme Court ruling concerning use tax. – Quill had no physical presence in North Dakota but it had a

licensed software program that some of its North Dakota customers used for checking Quill's current inventories and placing orders directly.

– North Dakota attempted to impose a use tax on Quill, which was struck down by the Supreme Court.

• Remote sellers can no longer assume that Quill v. North Dakota means they don’t have to collect sales tax.

Businesses need to reach customers quickly

• Manage inventory in new places• Distributed warehouses• Fulfillment by Amazon• Drop shipping

…but, these activities can increase your tax exposure!

Driving traffic through affiliate programs can increase customer reach

• Expand brand awareness• Create more sales opportunities • Keep the cost of sale low

2009 2016

$1.9 B

$4.8 BUS Affiliate Marketing Forecast*

*Source: Forrester Research

…but, these activities can increase your tax exposure!


New online sales tax laws are being passed

…which can increase your tax exposure!

More tax laws being considered

• Amazon Laws • Economic Nexus Laws• Streamline Sales Tax (SST)• Marketplace Fairness Act (MFA)

…which can increase your tax exposure!

Multi-state locations Maintenance/service/

repairs Own/lease real property Hosted DataCenters Field sales/service staff Charge

Licenses/royalty/fees Direct and/or online sales

Affiliates Tradeshows Commissions to resellers

(1099s) Investors/board members Marketing/Web advertising Drop shipments Maintaining inventory

Activities that can trigger nexus

…and increase your tax exposure!

Not to mention…

12,00070,00014,000

Managing tax manually is a drain…

Hours per month per employee

Source: Aberdeen Group, November 2014

Managing tax manually creates risk…

Source: Wakefield Research, July 2013

Average total cost for businesses to manage a sales tax audit

44% can't remember the last time they updated their sales tax processes

Percentage of businesses that believe a sales tax auditor would find a mistake

Less than one month

23%

1 - 6 Months

20%Over 6 Months14%

44%

Automation gets results

• Cut monthly returns prep and filing work in half2

• Avoid overpayment 90% more often1

• Pass audits without penalty 50% more often1

Source: 1. Aberdeen Research, 2. TechValidate

In 2015 we managed 213 million transactions valued at $16 billion for 940 leading retailers.

Don’t take our word for it…

Life is Good: Expanding through affiliates

“We knew we couldn’t be tax experts in every state. We needed a company to provide that expertise.”

– Bob Romano, VP of Finance

Chempoint.com: Growing sales globally

“If you have a lot of transactions, you really need to look into automating. I don’t think you could manage your own tax system, in the United States, at least. It just doesn’t make sense in this day and age.”

– Kelly O’Hanlon, VP of Finance

David Yurman Corporation: Reducing risk

“Because our processes are now 100% accurate, we sleep better at night knowing that we’re in compliance. Avalara AvaTax eliminates any potential for manual mistakes.”

– Scott Vogel, CFO

Ganz: Building a best-in-class ecommerce engine

“Having Avalara in place allows us the freedom to focus on our business, not on sales tax management or burdensome maintenance. Having a sales tax solution that’s automated and takes care of itself is one less thing to worry about.”– Adam Litvack, Ecommerce Manager

End-to-end compliance

© Avalara CONFIDENTIAL & PROPRIETARY

Thank you


Trivia #3 – Global Expansion

• Brazil has had it’s share of issues…what is current inflation rate?A. 5%B. 10%C. 20%D. A trunk load of Reals


Trivia #3 – Global Expansion

B. 10%

Katie McGinnpro.whitepages.comSeptember 15th, 2016

Balancing Customer Experience & Risk with Identity Verification


Thief

Scammer

Bad Actor

Fraudster

Con Artist

?#@*&%!


CyberSource Fraud Benchmark Study

A Larger CohortThe Millennial generation is the biggest in US History–Even bigger than the Baby Boom.

Source: US Census Bureau

A larger cohort

The first digital natives

Social and connected

Less money to spend

Encumbered with debt

Different priorities

92M 61M 77MMILLENIALS BABY

BOOMERSGENERATION X

Brands and Retail

Source: AIMIA Inc. “Born this Way: US Millennial Loyalty Survey” ©2012

Millennials’ affinity for technology is reshaping the retail space. With product information, reviews and price comparisons at their fingertips, Millennials are turning to brands that can offer maximum convenience at the lowest cost.

57% of millennials compare prices in store.


“I WANT IT NOW DADDY”

80% of shoppers want same day shipping

61% of shoppers want their goods within 3 hours

92% of millennials would make a banking choice based on digital services

Cybersource Fraud Benchmark Study

The Four Layers of Identity Assessment

Source: Gartner (November 2015)

Anchors: Person, Business, Email, Phone, Address, Device, IP, Peer Groups/Social Networks

Layer 4: Linkages, Metadata

External PII/Regulated, External non-PII/Nonregulated Social Network, Internal Records, Identity Documents

Layer 3: User Data

Web Session Navigation Behavior, In-App Navigation Behavior, Gesture Analytics

Layer 2: User Navigation

Location, Device Point, Device Behavior, Voice Channel Phoneprint, Voice Channel Phone Behavior, Caller ID, Mobile ID

Layer 1: Endpoint

Risk

-bas

ed id

entit

y pr

oofin

g

Nar

row

dow

n ex

cepti

ons f

or fo

llow

-up


2-Factor AuthenticationDevice ID

Identity Verification

Biometrics

Fraud Platform

Chargeback Management

CVV

3D Secure

Behavior Analytics

Social Media

IP GeolocationEmail Validation

AVS

Phone Verification

Analytics & Reporting


• Phone• Current address • Address history• Age range• Gender• Link age to

address • Link age to

phone

EMAILPHONE• Occupant name• Additional residents• Deliverability• USPS standard address• Address Type

• Valid / Invalid• IsConnected flag• Line type

• Carrier• Do not call registry • Pre-paid flag • Alternate phones**

• Valid / Invalid• Registered name• First seen date• Domain creation date

• Proxy Flag• Geolocation• Distance from address

Data AttributesPERSON ADDRESS

• Mobile• Non-fixed VOIP• Fixed VOIP

• Landline• Premium • Toll-free

IP ADDRESS• Single unit• Multi unit• PO Box

• Residential• Commercial

Line Type

Pre-paid flag

First seen date

Distance from address


ONLINE ORDER PLACED

Phone NumberSUBSCRIBER NAMELINE TYPECARRIER

COUNTRY CODEIS CONNECTEDIS VALIDIS PREPAID

GEOLOCATIONIS PROXYDISTANCE TO

ADDRESS

IPDISPOSABLE EMAILFIRST SEENPREFERRED NAMEVALID STATUSIS AUTO-GENERATED

Email

LINKED TO PHONELINKED TO ADRESSLINKED TO EMAILFAKE OR CELEBRITY

NamePHYSICAL LOCATIONUSAGE TYPERECEIVING EMAILRESIDENT NAMEDELIVERY POINT

Address

Double-Digit Reduction in Insult Rates


Order

Manual Review

Tools

Optimize the Order Review Process

Accept

Rules & Models

Reject

Whitepages Pro API

Whitepages Pro Web

Confirm the validity of a phone number, including carrier and line type, in every country in the worldGlobal email address coverage provides first-seen date, validity the email, and domain creation date.

Confirm the validity of the building or unit’s address, or the street itself, in every country in the world.

We have worldwide IP data that provides proxy status, geolocation, and connection type information.

International Data for Identity Check


IP AddressPHONE• Valid / Invalid• Auto-Generated Flag• Disposable Flag• Email-to-Name• First Seen Date• Domain Creation Date

• Valid / Invalid• Line type

• Carrier

• Valid / Invalid• Proxy Flag• Geolocation• Distance from Address• Distance from Phone• Connection type

International Data Attributes

ADDRESS EMAIL

Mobile Non-fixed

VOIP Fixed VOIP

Landline Premium Toll-free

• Valid / Invalid• Level of Verification

The Four Layers of Identity Assessment

Source: Gartner (November 2015)

Anchors: Person, Business, Email, Phone, Address, Device, IP, Peer Groups/Social Networks

Layer 4: Linkages, Metadata

External PII/Regulated, External non-PII/Nonregulated Social Network, Internal Records, Identity Documents

Layer 3: User Data

Web Session Navigation Behavior, In-App Navigation Behavior, Gesture Analytics

Layer 2: User Navigation

Location, Device Point, Device Behavior, Voice Channel Phoneprint, Voice Channel Phone Behavior, Caller ID, Mobile ID

Layer 1: Endpoint

Risk

-bas

ed id

entit

y pr

oofin

g

Nar

row

dow

n ex

cepti

ons f

or fo

llow

-up


Questions?


Trivia #4 – Facebook Future

• Which of these is NOT (as far as we know) a part their strategy?A. Acquisition of all known competitors B. Virtual Reality C. Augmented Reality D. Payments sent via “Messenger”E. Free internet access in many emerging marketsF. AI powered chatbots and digital assistantsG. Battling privacy and security concerns with

consumers and regulators in every single market they operate.


Trivia #4 – Facebook Future

A. Acquisition of all known competitors

Extend Customer Lifetime Value with Payments Data Sunil DixitPrincipal Product Manager - VantivSeptember 15, 2016


We’re the second largest payments acquirer in the United States.

Our eCommerce division processes payments for:


Agenda

• Rise of Recurring Payments and Key Metrics• Payments Data and Customer Lifetime Value• Use Cases for Payments Data• The Next Frontiers in Payments Data

Rise of Recurring PaymentsAnd key metrics for customer value

65DIGITAL IDENTITY & COMMERCE TOUR65

“Recurring revenue business models are not a little bit better than non-recurring models. They are 10x better.”

– Jeff Bussgang, General Partner, Flybridge Capital

http://bostonvcblog.typepad.com/vc/2014/07/recurring-revenue-is-magic.html

http://bostonvcblog.typepad.com/vc/2014/07/recurring-revenue-is-magic.html


Recurring Payments

Installment Payments


Customer Lifetime Value (CLV)

CLV (simple)

Revenue per Customer * Lifespan of the Customer

CLV (complex)

Gross Margin per Customer * Discounted Retention Rate

https://blog.kissmetrics.com/how-to-calculate-lifetime-value/



Approval Rates and Churn


Measuring outcomes – it’s about approval rates

What does an increase of 1% in authorization approval rate

mean for your revenue?


1M auths / month * $10 * 85% Approval Rate = $8,500,000

1M auths / month * $10 * 86% Approval Rate = $8,600,000

$100,000 / month lift

Approval rates – a hypothetical example


What does an increment of 1% in approval rate mean for your revenue?

$100,000 * 12 months = $1.2M in annual revenue

Measuring outcomes – it’s about approval rates

72DIGITAL IDENTITY & COMMERCE TOUR72

“1% - 2.5% churn per month is acceptable. Higher than that, you are filling a leaky bucket.” -- David Skok, a VC with Matrix Partners

http://www.forentrepreneurs.com/saas-business-models-slide-deck, slide 41

http://www.forentrepreneurs.com/saas-business-models-slide-deck


Churn – The Key to Longevity

More than 2.5% churn = a leaky bucket

Early on, new bookings outpace churn.

4 years on, churn gets harder to replace with bookings!

http://www.forentrepreneurs.com/why-churn-is-critical-in-saas/


Small Moves = Big Gains

More than 2.5% churn = a leaky bucket

Low churn + upsell =negative churn

Negative churn requiresconsistent approval rates

http://www.forentrepreneurs.com/why-churn-is-critical-in-saas/


Account Updater - 2013-2016 DisruptionSource: Vantiv eCommerce data – 2013-2016

Payments Data and CLV Available data and use cases


Payments Data That Impacts CLV

Revenue per Customer:- Method of payment (Visa, MasterCard, wallet, direct debit)- Card type (credit, debit, prepaid, gift card)

Lifespan / Churn Rate - Approval rate and decline responses- Account updater participation by the issuing bank- Card type- Issuing bank


Payments Data That Impacts CLV

Gross Margin per Customer- Account updater participation- Method of payment- Fraud check response data


Account Updater Data – Take Action

• Account Number Changed and Expiration Date Changed responses – look for “spikes” that indicate a breach or portfolio swap

• Closed Account – these are not temporary blocks! You’re going to need another method of payment.

• Contact Cardholder – could be temporary. Retry, resubmit AU request, reach out to the customer



Issuer Does Not Participate – DO NOT IGNORE THIS

Contact high value customers immediately for a new payment card after hard declines

Ask your processor for a list of issuers that do not participate in account updater



One account update request per month is not enough

If you receive a “no change” response, but get a decline, keep requesting as

you recycle


Stark Differences – Credit / Debit / Prepaid

Ask your processor to indicate for each transaction:

• Credit / Debit• Prepaid – Reloadability, Available Balance• Corporate / Consumer / Country of Issuing Bank





Method of Payment – Take Action

Credit Cards:

• Type of card can indicate capacity to spend• Visa Signature, MasterCard WorldCard have higher

limits

Debit Cards:

Recycle on Fridays (payday!) – we have seen a 3% lift in approval rate


Method of Payment – Take Action

Prepaid Cards:

• Block non-reloadable cards for recurring and installment billing products

• If you MUST accept prepaid cards for installment payments, consider a wallet (PayPal or pre-authorized direct debit account)

• Don’t recycle non-reloadable cards

• Leverage partial authorizations to recoup CAC


Decline Responses – Take ActionResponse Action

Soft Declines Retry aggressively

Hard Declines Request account updates, retry conservatively

Restricted / Lost / Stolen Card Beware of card testing

CVV Decline Remove CVV for recurring payments

The Next Frontiers in Payments DataIssuer Data and Wallets


Issuers – What are they thinking?

• Track decline codes by issuer

• Don’t send “made-up” data for AVS or Expiration Dates – leave it blank!

• Monitor sudden drops in approval rate, month-over-month

• Don’t over-react to large approval rate swings over short time periods

• Does the issuer like your MCC? Compare your data to that of other merchants in your MCC


And what about wallets?


And what about wallets?

• Unquestionably higher conversion

• But provisioning is key

• Do your users have an Apple Pay account? An iPhone 6? A MasterCard or Visa?

Ask your customers, then implement!


Trivia #5 – Amazon History

• Which of these were used as desks by early amazon employees?A. Shelves torn out of independent book

storesB. Sides of antique book boxesC. Pizza boxesD. Doors


Trivia #5 – Amazon History

D. Doors

Merchant Risk Council

BenchmarkingMeasure KPI’s

Highlight

Issues

Identify Opportuniti

es

Investigate

Options

Implement

Solutions

2016 Global Payments Survey

23%9%

49%

2%17%20%

8%

43%

19%9%

Type of MerchantMRC

$5M – <$25M

$25M – <$100M

$100M – <$1B

$1B + NA

10%20%

37%

23%

10%

38%

10%

25%

5%

21%

Size of MerchantMRC

MRC49%

Non MRC 51%

MRC vs. Non-MRC

n=94n=

99

Total Sample – 193

Sample Demographics

Mexico

Japan

Australia

Russia

Spain

Germany

Canada

4%7%

4%3%

11%11%

3%19%20%

39%43%

51%23%

67%

7%9%9%11%

19%5%6%7%

11%25%

32%52%

48%86%

Mentioned as Top 5 e-Commerce MarketsNorth

America

Europe

Asia Pacific

South / Central America

China Makes First Appearance in Top 10

Cards Wallets Bank Transfer / Invoice

Gift Cards(Voucher)

Other (CoD, Crypto, Carrier Billing)

99%66% 49% 36% 21%

% of Merchants Supporting the Payment Method

Cards Wallets Bank Transfer / Invoice

Gift Cards(Voucher)

Other (CoD, Crypto, Carrier Billing)

4.3 5.2 3.5 2.9 2.7

Average Number of Payment Methods Supported

182 120 90 65 39

Payment Methods Supported 2015

20.0 19.312.2 9.3 13.09.7 6.3 7.8 4.9

9.9

Number of Payment Types Currently UseMRCNon MRC

Number of Payment Types Currently Use

Number of Payment Types Plan to Add

14.5

1.8

7.6

1.3

Number of Payment TypesMRCNon MRC

MRC Merchants Support Twice as Many Payment

Types as Non MRC Members

BankTransfersWallet

Cards

Gift Cards / Vouchers

North AmericaCards 94%

Wallets 57%Bank

Transfer 27%

Gift Cards 35%

APACCards 94%

Wallets 69%Bank

Transfer 25%

Gift Cards 50%

EuropeCards 88%

Wallets 64%Bank

Transfer 52%

Gift Cards 27%

South / Central America

Cards 94%Wallets 50%Bank

Transfer 56%

Gift Cards 11%

While Cards are Supported Widely, Other Methods are Popular Depending

on Country

95%

59%49%

56%

13%

33%24%

96%

64%

42%

63%

8%

34% 31%

Sales Channel Supported – YOYOverall 2014

Mobile Channel Support Has Increased

98%

69%57% 59%

9%

36% 35%

95%

60%

27%

67%

7%

32%26%

Sales Channel Supported – 2015

MRCNon MRC

MRC Merchants Are Early Adopters

Number of Mobile Payment Types Currently Use

Number of Modile Payment Types Plan to Add

1.6 1.21.2 1.1

Number of Mobile Payment TypesMRC

1.72.3

1.32.1

1.3 1.0 1.01.5

1.0

Number of Mobile Payment TypesMRC

Mobile Payment Types Supported

68%

47%57%

27%

41%33%

22%

5% 9%

76%

56% 54% 51%41% 38%

31%22%

9%3%

Mentioned in Top 5 KPI 20142015

77 147 54 108 65 105 31 98 47 79 38 73 25 60 6 42 10 18

Top KPIs Measured Remained FairlyConsistent with Prior Year

90%

64% 65%51%

36% 36%29%

20%10%

2%

63%

48% 44%51%

45%39%

33%23%

9%3%

Mentioned in Top 5 KPI MRCNon MRC

85 62 60 48 61 44 48 50 34 45 34 39 27 33 10 23 9 9

MRC Members are Focused on Sales Conversion

Site Visits

Add Items to Cart

CheckoutEnter Payment Info / Selectfrom Stored Payment CredentialsComplete Order66%

53% of the respondentsdon’t know or don’t track.It is critical to track these KPIs

Merchants Seem to Use Different Definitions ofConversion Rates as Their Results Ranged from 1.2% to 100%

Conversion Rates

What Point in the Funnel Do You Start Measuring?

Emphasis on Cards but PayPal, ACH, and Gift Cards are Also Common

Worldwide Credit Card PayPal ACH

Country Average n Average n Average nUnited States 83 110 87 50 94 20Canada 88 57 92 22 96* 8*

*Caution – small base

Authorization Rate in the Region by Payment Type

Authorization Rate – North America

Authorization Rate in the Region by Payment Type

WorldwideCredit Card

County / Region-Specific Cards Outside of North America

(Carte Bleue, CartaSi, Solo, etc.) PayPal

Country Average n Average n Average n

United Kingdom 81 64 73 14 83 40

Germany 81 37 96 7 84 26France 78 30 75 13 77 21Spain 71* 14* 78* 11*Italy 77* 9*

Highly Fragmented, Adopting New Methods, Bank Transfers and Invoice Payments Also Common

*Caution – small base

Authorization Rate – Europe

45%31%

46%

72%

35%46%

% of Merchants Running Pre Auth –

by Merchant Type

Overall 46% Merchants run PreAuth, no difference for MRC vs. Non MRC

Yes46%

No 54%

All Merchants: Run

Pre-Autho-rization

Services, excluding travel (e.g., consumer finance, payment services, business services, advertising, education, government, charity, etc.)

Pre Authorization Usage Among Merchants

The sample is small to put a chart by merchant type but the directional results show that Subscription Merchants retry most number of time across all payment methods, except bank transfer.

Cards Wallet Bank Transfer Gift Card

6 53 3

Average Number of Times Retry Transaction – by Payment Method

Cards Wallet Bank Transfer Gift Card

59%35%

21% 30%

% of Merchants who Retry a Transaction – by Payment Method

n=80 n=30 n=14 n=12

Payment Retry Practices

Kick StartInternal Process

CancelAccount /

Order

InternalBlacklisting

External Shared

Blacklisting

ContactCustomer

Referring toExternal

DataSource

Provider

38%24% 23%

11% 11% 9%

When an Authorization Fails

Other CommentaryLapse plan for ecomm and customer must re-

purchasecry

▷ Typically: – Subscription services Merchants contact customer.– Physical goods and Travel Merchants do more Internal

collection and internal blacklisting.

Merchants Rely on Internal Processes for Recovery

▷ Note: It’s % of Merchants using 3D Secure, not how much they are using.

% of Merchants Using

3D Secure

North America

United States 18%

Canada 14%

Europe

United Kingdom 40%

France 45%

Germany 46%

Yes33%

No 67%

Use 3D Secure

3D Secure Is Not Widely in Use Due to Friction Concerns

11%

8%

9%

23%

20%

22%

24%

22%

32%

43%

51%

8%

10%

13%

16%

15%

20%

29%

31%

29%

25%

35%

Non MRCMRC

Priorities Related to Paymentse-Commerce Fraud

IT ConstraintsSystem Enhancements and

Technical Integrations

Cost of Payment

Security (PCI DSS,Tokenization)

Business Growthand Expansion

Checkout Conversion

Acceptance of AlternativeForms of Payment

Staff ManagementChallenges

Data Access

OrganizationalStructure

Role of Payment Management is Changing from Cost Center to Revenue

Center

Key Takeaways

MRC members more likely to be focused on order conversion and payment success

Top eCommerce markets similar to last survey China, Japan, Russia

and Mexico joined the top 12 list

Merchants report supporting 11 payment types on average MRC merchants

14.5 types vs. 7.6 for non-MRC

Order conversion rates of 64% to 66% donot appear to vary significantly by payment method

One third of merchants support 3D-Secure Payer Authentication services in one ormore countries

Top payment priorities for MRC merchants are: Fraud, IT Constraints,

System changes and integration, cost of payment, and checkout conversion rate

Phone 206.364.2789

Fax 206.367.1115

Merchant Risk Council 1809 7th Ave. Suite 1403 Seattle WA 98101

[email protected]

Contact the MRC


Trivia #6 – Fraud Attacks

• According to the AFP, Which of these fraud attacks is likely attributing a large uptick in companies experiencing fraud?A. EMV implementationB. Targeting phishing leading to wire transfer

fraudC. Check fraud


Trivia #6 – Fraud Attacks

B. Targeting phishing leading to wire transfer fraud

The Unique Aspects of Marketplace Economy with uShip, WyzAnt & HopSkipDrive


Meet the Panelists

Shannon Scott Ethel Spyratos

Carolyn Yashari Becher

Director of Risk & Payments General Counsel Co-Founder, Head

of Policy and People, and

General Counsel

Fraud Tools & Trends with HotelTonight, Bolt & eBay


Meet the Panelists

James Pierson Pete Kledaras

Carmen Honacker

Director, Payments & Risk Head of Risk Sr. Manager, Global

Seller Fraud


2013 2014 2015

0.51%

1.32%1.47%

eCommerce

2013 2014 2015

0.80%

1.39%1.69%

mCommerce

2014 2015 2016 2017 2018

Industrywide Fraud Losses

$2.9 B

$6.4 B

$3.8 B

$4.7 B

$5.5 B

Fraud Losses


KPIs

• Chargeback – Often the first indication of an issue – Can lead to costly fines and monitoring programs

• Review– Often the largest physical cost center – Can be managed through automated screening rules

• Reject – Can often go untracked and unnoticed – Can be managed through automated screening rules

• Others?


Trends

• Friendly Fraud

• Account takeover

• EMV/ Chip & PIN

• Compelling evidence

• Carrier re-directs

• Non Fraud coded chargebacks


Device ID

Fraud Platform

Identity Verification

2-Factor Authentication Biometrics

Behavior Analytics

IP GeolocationAVS

CVV

3D Secure

Chargeback Management Social Media

Email validation

Phone verification

Positive/ Negative Lists

Networks


The Sponsors