The Challenges of Selling Through the Internet
Report Magazine, September 19, 2011
Demand and commercial transactions have increased mainly because of the advance of IT infrastructures. "Today we have several tools to promote the development of e-commerce in our region. The infrastructure needed to generate a dynamic channel depends, largely, on having computers with Internet access. Another key point is the type of connection, because no one is going to spend three hours loading a page just to buy something or hire a service," explained Eldred García, SVP of Business Development at Accertify, during his recent visit to Buenos Aires.
For those unfamiliar with the company, Accertify is a subsidiary of American Express. Its mission, says García, is to provide e-commerce companies with software solutions, tools, and strategies for online fraud prevention.
A Booming Region
Among the company's list of achievements is the optimization of the operating performance at Despegar.com, expediting the site's decision-making process. Another notable accomplishment was the development of an intuitive graphic interface, which was no small feat. Also, "the company gave the fraud prevention team at Despegar.com everything they needed to enhance their responsiveness capabilities and effectively face the new trends in fraud."
During our conversation, García stated that "according to some studies on e-commerce, the projections of annual growth for the region range from 55% to 60%. While that's an average estimation, it is clear that the percentages will vary for each country and for each industry."
García also pointed out that there is now another trend in play. "Today, there's another important channel for accessing the web: cell phones."
He added, "This infrastructure is very much related to access to electronic payment systems, such as credit cards. Therefore, development in those areas has boosted the recent growth in the region."
The Power of Information
But when it comes to platforms for travel agencies, García claims that the service provided depends on data management. "In our case, we can handle any type of transaction. It doesn't necessarily have to be a payment operation. For example, one important process is to keep a registry of new clients, which is not a transaction but does depend on data management. However, that might eventually lead to a future transaction. After analyzing the risk level of a potential client, it should be considered whether the client should be registered or if they represent a potential risk," explains García. To round out his explanation, he said that flexibility of information "does not limit fraud prevention to companies of a certain size. That is, travel companies of all sizes might need fraud prevention systems."
When asked about the level of fraud committed nowadays, he mentioned another study. On average, the region shows that ticket sales are plagued with "a high level of fraud. It is also true that the use of fraud prevention strategies is not as widespread as in other parts of the world."
"Not so long ago, the strategy to prevent fraud was to get every tool available on the market and use them during a transaction," says García, and he admits that this 'solution' caused many problems.
"Fraud makers browse the Internet using those same tools and search for the more vulnerable areas to infiltrate. Hence, on its own, that strategy is far from effective. Our focus is to concentrate the different tools and resources available within a unified platform to leverage their power as a group as well as separately. A company should not apply the same tool to every customer. It's like trying to build a house with nothing but a hammer. You can't go around hammering everything," stresses García.
Travel agencies that have seen an increase in their online transactions should keep in mind that "the percentage of manual operations for detecting fraud should be between 3% and 5%." If a company is dealing with higher levels, the cost of fraud prevention is too high. A company should never forget that everything required to avoid fraud adds to the cost of fraud prevention. For example, if a company had an army of people monitoring everything that goes into the system, the fraud risk level would be low, but the cost of preventing fraud would be very high."
His own experience has taught him that "reducing fraud and chargebacks can be achieved by closing transactions," which implies cutting down on the flow of the channel." To sum up the matter, García stated, "The real challenge is finding a way to prevent fraud while, at the same time, increasing sales."