BOOST REVENUE AND CUSTOMER SATISFACTION WITH EFFECTIVE FRAUD PREVENTION

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1 Chargebacks were almost cut in half thanks to GlobalCollect, decreasing from 1.40% in the beginning of 2014 to 0.5% by end of December 2014 despite the double digit growth in sales. BOOST REVENUE AND CUSTOMER SATISFACTION WITH EFFECTIVE FRAUD PREVENTION A CASE STUDY WITH RAIL EUROPE 4A As a leading distributor of train tickets and rail passes in Asia, Africa, Australia and South America ( Territories ), Rail Europe 4A faces a complex and rapidly changing fraud landscape. With the company s volume of transactions outgrowing its capacity to monitor each transaction for fraud, the business needed a second line of defense. So it turned to GlobalCollect s Managed Fraud Services, with impressive results

2 Gone are the days when an in-house fraud team acting as a single line of defense provided sufficient fraud prevention capabilities for online merchants. As technology becomes increasingly sophisticated, so do fraudsters, posing new and ever-evolving challenges to fraud prevention managers and teams. This leads many ecommerce companies to engage with external fraud prevention specialists to bring in specific expertise and alleviate pressure on the in-house team. These external specialists then act as a secondary line of defense that further reduces exposure to online fraud and chargebacks. International rail experts Rail Europe 4A know this challenge well. With 3 million travelers buying rail products every year (many of whom are traveling across country borders) the company needs to be able to react quickly and efficiently to identify and address possible fraud issues, without disrupting genuine payments. THE CHALLENGE As Rail Europe 4A expanded its operations into several new markets across its territories, it also became more exposed to fraudsters. In general, the usual period of time between the purchase and actual travel is 3 days, while chargebacks are received on average within a 50-day timeframe after the payment date. Because the service is used almost instantly, this creates a massive vulnerability. As such, for several weeks Rail Europe 4A could remain unaware of fraudulent transactions. The evolution of technology means Rail Europe 4A sells the majority of their tickets electronically with instantaneous delivery. And the online business is growing quickly and is one of the fastest growth channels for Rail Europe 4A. Furthermore, Rail Europe 4A s organic growth and expansion into new markets increased the volume of transactions to the point where the company came to the realization that, logistically, manual validation of transactions one by one was becoming increasingly difficult and subject to manual error. Statistics: The % of Rail Europe 4A online transactions from around the globe Africa 2.11% Other 8.69% Oceania 18.62% America 44.47% So part of the challenge became determining how to manage thousands of payments every day not just efficiently, but flexibly. Particularly when the very nature of the business means transactions unexpectedly popping up all over its extended territories. Rail Europe 4A s web and payment solutions coordinator, Jean-Michel Boromée, explains the problem: We had developed an in-house fraud solution to control transactions one by one, but it was human dependent and meant we kept experiencing errors. We needed a solution flexible enough to prevent fraud in the most effective way possible, while minimizing the rejection of a large number of real bookings. We re not fraud experts and we quickly realized if we wanted to grow, we needed a more effective system.

3 THE BRIEF As the travel industry fuels its sales efforts by encouraging consumers to use electronic and remote channels which are less costly and vastly accessible they also face higher vulnerabilities. An efficient Risk Prevention approach can allow travel companies to reduce vulnerabilities and maximize profitability. Rail Europe 4A approached GlobalCollect to lower its fraud losses and maintain its online reputation with banks and customers. It hoped this would not only boost the company s revenue but also its customer experience. The main objective for GlobalCollect was to reduce the number of chargebacks, which were affecting the company s bottom line. In a successful Risk Management plan, market location, consumer mix, sales channels and strategic focus can produce significant variance in performance. In order to overcome the risk associated with each of these components, knowledge and expertise in global payment trends are essential. The right choice of tools and best practices for each specific market model, along with access to benchmarking data of other successful global online markets, play the most important role. Evidently the ultimate goal of such a tailor-made plan is to maximise profit and minimise financial losses due to fraud. If we assume that financial loss in Card Not Present environments is an iceberg, disputed charges are just the tip. For every dollar in chargebacks, merchants lose an average of four more dollars due to indirect costs. Hidden yet catastrophic costs come in the form of: customer s shopping experience missed opportunities reputational loss higher operational costs associated with developing in-house solutions and processes punitive measures associated with individual chargebacks fraud and chargeback programs Tackling these invisible costs is essential to reduce risks and improve the bottom line. The rail ticket operator also wanted a collaborative approach. It didn t just want GlobalCollect to take over. As Boromée explained: We need to keep up with the management of our fraud rules, so we know what s going on and how we can learn from it. The 3 words I d use to describe GlobalCollect are: efficient, pro-active and expert - Jean-Michel Boromée, Rail Europe 4A

4 THE EXECUTION Rail Europe 4A opted for GlobalCollect s Managed Fraud Services. This meant GlobalCollect worked closely with Rail Europe 4A to identify and highlight common threats and establish best practices and rules that would help to prevent fraud, improve customer satisfaction by minimising false positives, and increase overall success rate. Acting as an extension of Rail Europe 4A s in-house fraud team, the GlobalCollect team worked closely with Rail Europe 4A to formulate and implement the most effective risk management strategy catered specifically to the company. The approach included: a dedicated GlobalCollect fraud risk manager to assess the business model, review the history of the merchant, and continuously adjust and evaluate the parameters of the fraud tools training Rail Europe 4A staff and supporting them throughout the process risk rules pertinent to the business that were constantly updated, assessed and evolved providing knowledge and updates on recent fraud trends transactions that were managed in real time We identified various fraud trends and established appropriate counter measures, says Boromée. All were tailored to the needs of our specific markets And what was the best bit? Definitely working with a dedicated fraud manager it meant we were instantly effective, and this collaborative approach meant we could enhance our own anti-fraud skills. THE OUTCOME Rail Europe 4A started using GlobalCollect s Managed Fraud Services in Subsequently, fraudulent activities decreased from 1.40% in the beginning of 2014 to 0.50% by the end of the year. This made a huge difference to our business, says Boromée. But these weren t the only major gains for the company. GlobalCollect also implemented tailor-made rules in Rail Europe 4A s business model, which helped to optimize the company s fraud-detection process and prevent false positives. This process also increased Rail Europe 4A s success rate with the banks, cutting costs and boosting the bottom line. For Boromée, the strong combination of the new structure, bespoke tools and regular contact were all critical. The whole package helped us to achieve this successful outcome. We are very pleased with the results. And Rail Europe 4A s customers are also happier. These changes have made a big difference to our customers, says Boromée. If fraud was detected, we could make sure the genuine payments weren t declined and prevent the fraudulent transaction going through way before the chargeback happened. And the good news doesn t stop there. The profit generated by lowering the chargeback rates is being re-invested. For example, Rail Europe 4A is identifying customer drop-off points and implementing new sales dialogues for the Rail Europe 4A website to improve the customer experience.

5 3 QUICK FACTS ABOUT FRAUD It costs businesses big bucks Disputed charges are just 1 Today s commerce is so de- 2 3 the tip of the iceberg pendent upon card transactions that loss of card payments, even for a few days, can have long-term effects on market share, revenues and reputation. Tackling the invisible costs is essential to reduce risks and improve the bottom line. For $1 in chargebacks, a merchant can lose an average of $4 due to indirect costs. It could have serious consequences for your business In addition to the direct and indirect costs of chargebacks, when a merchant fails to meet schemes standards for risk management, they can be fined or even shut down. Not to mention the effect on your reputation. HOW CAN GLOBALCOLLECT HELP MY BUSINESS? GlobalCollect is a full-service provider for your fraud protection needs. The bespoke service means you can pick and mix tools and services according to your needs, including: Sophisticated anti-fraud products and services tailored to your business needs Protection against chargebacks, which in turn protects your revenue A dedicated, knowledgeable and expert fraud team to build tailor-made parameters that mitigate risk Your own fraud consultant, who ll focus on your business specifically Training to help your business improve its fraud management strategies, with a strong focus on your profitability and your consumers experiences 5 FACTS ABOUT GLOBALCOLLECT 1 GlobalCollect, 2 It 3 GlobalCollect 4 Its 5 GlobalCollect an Ingenico Group company, processes international ecommerce payments for more than 600 of the world s most recognised ecommerce brands such as Valve, Emirates and Levi s has 2 decades of payments experience, enabling clients to efficiently and securely accept payments from more than 170 countries in more than 150 currencies. offers more than 150 local payment methods, including all major credit cards, debit cards and alternative payment methods, giving unparalleled coverage throughout all global regions. robust systems guarantee its customers high availability and reliability. offers business intelligence tools, Managed Fraud Services and more than 400 payments experts. All of which help its clients all over the world to elevate their payment strategies while becoming a strategic asset.