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Payment acceptance Cross Border E-commerce: Challenges and Opportunities Howard Bell, Head of Online Payments, Barclaycard Internet Retailing ‘Payments.

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Presentation on theme: "Payment acceptance Cross Border E-commerce: Challenges and Opportunities Howard Bell, Head of Online Payments, Barclaycard Internet Retailing ‘Payments."— Presentation transcript:

1 payment acceptance Cross Border E-commerce: Challenges and Opportunities Howard Bell, Head of Online Payments, Barclaycard Internet Retailing ‘Payments & Fraud’ 11 th February 2010

2 2payment acceptanceCross Border eCommerce Feb 11 th 2010 Challenges and Opportunities european eCommerce trends market opportunities and challenges for retailers beating fraud

3 3payment acceptanceCross Border eCommerce Feb 11 th 2010 In EU markets, where internet penetration is low, e-commerce is growing rapidly ….. € millions Source: Forrester Research 2008 European e-commerce: online retail sales (Source: Forrester)

4 4payment acceptanceCross Border eCommerce Feb 11 th 2010 The European E-commerce Landscape The Headlines The European eCommerce payments market is worth €230 billion; €95 billion from the UK Visa and MasterCard are top 2 EU payment methods; PayPal is 3 rd There are approximately 500,000 e-commerce merchants across the EU – and 1/3 of these are internet only stores France, Spain and Italy are the fastest growing markets but currently have low internet penetration PCI DSS is a Global (and hence pan-European) requirement Increasingly Tier 2 EU merchants are seeking a hosted paypage (acquiring and gateway combined) Global Payment AcceptanceBarclaycard SmartPay – EU Marketing & Roll-out – Source: Barclaycard Proprietary Research, 2010

5 5payment acceptanceCross Border eCommerce Feb 11 th 2010 European shoppers expect choice Simple payments? “Which payment method (s) do you prefer when you buy products online?*” Source: Forrester Research Inc 40% 26% 24% 23% 19% 10% 60% 3% 43% 35% 5% 3% 35% 3% 57% 16% 17% 3% 26% 56% 3% 22% 31% 10% 51% 20% 14% 2% 32% 51% 14% 10% 26% 19% 43% 14% 11% 37% 16% 34% 43% 17% 11% 13% 24% Credit card Electronic bank transfer Debit/payment card PayPal Cheque/accept giro Cash Maestro/Solo UKCarte Bleue FR ELV DEiDEAL NL * Forrester allowed Consumers to select preferred methods and allowed multiple votes (hence totals>100%)

6 6payment acceptanceCross Border eCommerce Feb 11 th 2010 Opportunities are real; challenges need active management New Markets New Payment Streams New Shoppers PCI DSS Fraud & Chargebacks New Payment Methods OpportunitiesChallenges

7 7payment acceptanceCross Border eCommerce Feb 11 th 2010 International CNP Fraud* * as at Nov 2009 Headlines Decline in CNP Fraud (-13%) vs 2008 CNP Fraud still 60% of total fraud Top 5 buyer countries are US, Spain, Ireland, Cyprus and France Mix skewed towards Credit but Debit increasing (Credit 48%, Debit 40%, Charge 12%) International CNP fraud, Nov 2009

8 8payment acceptanceCross Border eCommerce Feb 11 th 2010 Barclaycard’s Approach to Beating Online Fraud Industry-Leading Performance–losses 40% lower than UK average »Robust vetting and advanced risk analytics Partnership approach with customers »Active collaboration with card schemes to identify & block fraudulent buyers »Leading Influence over Risk Policy e.g. PCI DSS New Propositions »“Fraud Reporter” – online daily file (PGP) to prevent dispatch to fraudsters

9 payment acceptance your questions? Confidential

10 10payment acceptanceCross Border eCommerce Feb 11 th 2010 What is Payment Card Fraud? Involves the use of a credit/debit card without the consent of the genuine cardholder or the account itself has been set up fraudulently. Fraud types include: CNP Fraud – merchant, retailer or service provider has no physical access to payment card. e.g. Internet / Mail Order / Telephone / Fax Counterfeit Fraud (cloned / skimmed) – A plastic card that has been printed, embossed or encoded so as to purport to be a genuine payment card issued with the authority of the genuine issuer Identity Theft / Fraud – Where someone uses your personal information such as name, payment card number or other identifying information without your permission to commit fraud or other crimes – Mail Interception / Social Engineering / Phishing / Malware Attacks / Raiding Bins Other Fraud Types – Lost & Stolen / Non Receipt of Mail / Application Fraud

11 11payment acceptanceCross Border eCommerce Feb 11 th 2010 Acquirer loss. No loss to BPA or retailer Issuer Loss Fraudulent funds recovered as a result of freezing bank accounts & diverting pdq Collusive 1 st Party Fraud by BPA Retailer Issuer Chargeback right exists CNP / No 3DS Card Present - No supporting evidence, signatures etc Shopper has rights Issuer has no chargeback right Where cardholder authentication exists - Chip & PIN or 3DS) Shopper has rights Issuer has no chargeback right Where cardholder authentication exists - Chip & PIN or 3DS Issuer Chargeback right exists CNP / No 3DS Card Present - No supporting evidence, signatures, verification etc Retailer loss Loss to BPA = Retailer unable to pay chargebacks Fraud Debt owed to BPA. Resulting from fraud activity at the retailer. Genuine 3 rd Party Fraud at BPA Retailer Fraud Occurs at Retailer Chargeback right.. Loss.. What is acquiring fraud?

12 12payment acceptanceCross Border eCommerce Feb 11 th 2010 Customer Recruitment – Best Practice Online customer additional information – Best practice -Customer service number - address to contact company -Statement on risk & fraud controls -Delivery methods & timings -Age verification methodology (age restricted goods & services) -Refund & returns policies -Privacy statements (permissible uses of customer information) -Depending on the type of customer, perhaps a terms of service and / or acceptable use policy

13 13payment acceptanceCross Border eCommerce Feb 11 th 2010 Customer Recruitment – Best Practice Trading information −Nature of goods & services −Design of home page & location of billing pages −Price patterns −Merchant location (Physical & Legal) −Ave or projected turnover −Ave or projected refund volume & refund policy −Ave or projected chargeback or fraud rates −Disclosure of all payment mechanisms offered −Disclosure of all sales channels inc all URL’s or referral sites −Check validity of telephone numbers / addresses / listed [personal & other contact information


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