CyberSource has released their UK Online Fraud Report. 

Interestingly, the report focuses on areas that HomeATM's patented PIN Debit platform would  solve. 

For example:

In the report (see graphic on the left and click to enlarge) they say that there is no concept of a real-time authorization when it comes to a payment by direct debit.  That the merchant will not know whether they will get their money until it actually arrives in their bank 3 days later.  

However, PIN Debit transactions are real-time, authorizations are immediate ad the funds are instantaneously set aside, guaranteeing payment.  In addition, chargebacks (except for extreme circumstances) are virtually eliminated and therefore the problem addressed in the chart on the left would be immediately/instantaneously solved. 

Another significant finding in the report is that that Internet Retailers continue to bear the the increasing burden of Fraud.  (see chart on right, click to enlarge)  What does PIN Debit do to reduce fraud and thus the financial burden associated with it?

PIN Debit not only provides dual-authentication (What you have/card and What you Know/PIN) but it also provides end-to-end encryption (E2EE).

So if merchants are the one's stuck with eating the cost of fraud, then maybe they should be the one's who take action and institute a safer payment alternative.

With Dual-Auth and E2EE, there is no safer payment mechanism than PIN Debit.

In today's tough economic environment, combined with low margins, can 13% of Internet Retailers continue losing 5% of their revenue?  Assuming 5% margins, can 37% of Internet Retailers afford to lose 20% of their revenue? 

Those numbers do NOT take into account the savings that could be enjoyed by switching over to the more secure, lower cost PIN Debit.  A billion dollar in annual sales Internet Retailer could save up to 100 basis points on each transaction.  Assuming they are paying an average of 2%, that would cut their processing fees in half.  Put another way, $20 million in processing would be reduced to $10,000,000.  What would that do do their bottom line?  Well, it would ADD 1%.  Since 37%  are LOSING 1%, that's a 2% swing.  Going back to the 5% margin example, that's a 40% increase in revenue.  Those are NOT insignificant numbers.

In addition, the report also shows that 50% of UK Consumers are AFRAID to shop online.  (Chart on left, click to enlarge)

Well, I say that if you give them a more secure transaction, let's say, one with dual-authentication, one that provides E2EE you have an exponentially better opportunity to alleviate those fears.  And once you decrease the fears, you increase the possibilities. 

Add those numbers to the equation (converting 50% of the population to online shopping by alleviating their fears) by offering a secure payment mechanism and you've got one heck of an enduring strategy to contend with the problem.  

The recession should help online retailers as it bites into bricks and mortar (high street) sales. Experienced online shoppers know that they can do research, comparison shop, and get the best deal. 

Now all the Internet Retailers need to do is to cut fraud, mitigate risk, and provide a faster route to receive their payments. 

Real-time, dual-auth, E2EE PIN Debit transactions are not only a perfect fit.  Don't believe me?  Do research and comparison shop.  Then come to your own conclusions as to what payment mechanism gives you more bang for your shoppers buck.  To get you started I've provided links at the end of this post.  (Related Articles)

To review.  PIN debit provides real-time authorization, sorry mate, "authorisation"...immediately sets aside the funds (guaranteeing payment) reduces the fraud that Internet Retailers are stuck holding the bag on, reduces processing costs by up to 100 basis points, and increases the consumers faith that it's a safe, secure, dually-authenticated, end to end encrypted transaction, thus alleviating their fears.




Where am I wrong here?  I'm not trying to be a wanker.  I'm just curious as to what it might be that I am missing.  Anyone disagee?  Anyone have other thoughts?  Love to hear them...post your comments below...

JBF - PIN Payments Blog

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