Post on 15-Apr-2017
transcript
Welcome to the Seattle Digital Identity & Commerce Tour!September 13, 2016
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Agenda9:15 – 10:15 am Opening Keynote: Cyber Threat Trends with
The FBIThis session will cover the recent trends the FBI is seeing in fraudulent schemes, including cyber-based as well as more traditional frauds, targeting both individuals and businesses.
10:15 – 10:45 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.
10:45 -11:15 am What every eCommerce Seller needs to know about Sales Tax with AvalaraWhen do you need to collect sales tax for online transactions? How much? With every state making up their own rules, it’s hard to keep up. In this session, tax expert Shane Ratigan will break down the rules and share the latest on sales tax laws impacting eCommerce. Learn what states are doing to force online merchants to collect sales tax on every transaction, and how you can prepare your business.
11:15 – 11:45 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 work with identity verification data to reduce fraud and speed good transactions to clear.
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Agenda11:45 – 12:45 pm Lunch with Open Merchant Q & A
12:45 – 1:30 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. As a result, members are able to analyze their own systems, processes, and policies in comparison to merchants in different regions and sectors, and optimize their businesses in the process.
1:30 – 2:30 pm What’s Top of Mind in Payments and Fraud for Microsoft, Zillow, and ExpediaIt is a fact, that there are an overwhelming number of new technologies that merchants can deploy to maximize their online operations. In this panel, three Seattle-based merchants will describe the key areas of focus for their companies in regard to data analytics, payments and fraud. With a focus on interaction with the attendees, this panel will provide thought leadership, operational ideas and a chance for you to ask some industry experts their opinions on breaking trends.
2:30 – 3:30 pmClosing Keynote with Remitly CEO, Matt Oppenheimer
3:30 – 4:30 pm Happy Hour at Frolik Kitchen & Bar Sponsored by The Merchant Risk Council
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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
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Who is here?
• Online merchants• Financial services companies• Solution providers• Consultants
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The Sponsors
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Tom Donlea, emcee
• 3 years @ Whitepages Pro• 7 years @ Merchant Risk Council
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Why are we here?
• Growth of this channel• Complexity of our space• Consumer expectations• Global expansion• Organizational changes • Industry trends and regulatory issues
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History – Mary Meeker Slides
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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!
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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
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Trivia #1 – Customer Service
B. Gator
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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
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Trivia #2 - Consumer Trends
A. 23
Extend Customer Lifetime Value with Payments Data Paul FinleySr. Director, eCommerce SolutionsVantivSept. 13, 2016
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Who is Vantiv?
• We’re the second-largest payments acquirer in the United States.
• Our eCommerce division processes payments for companies like Hulu, Netflix, Ancestry.com, Overstock.com, and Wayfair – among hundreds of others.
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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
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“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
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Recurring Payments
Installment Payments
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Customer Lifetime Value (CLV)
CLV (simple)
Revenue per Customer * Lifespan of the Customer
CLV (complex)
Gross Margin per Customer * Discounted Retention Rate
Approval Rates and Churn
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Measuring outcomes – it’s about approval rates
What does an increase of 1% in authorization approval rate
mean for your revenue?
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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
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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
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“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
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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!
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Small Moves = Big Gains
More than 2.5% churn = a leaky bucket
Low churn + upsell =negative churn
Negative churn requiresconsistent approval rates
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Account Updater - 2013-2016 Disruption
Payments Data and CLV Available data and use cases
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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
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Payments Data That Impacts CLV
Gross Margin per Customer- Account updater participation- Method of payment- Fraud check response data
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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
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Account Updater Data – Take Action
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
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Account Updater Data – Take Action
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
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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
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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
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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
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Decline Responses – Take ActionResponse Action
Soft Declines Retry aggressivelyHard Declines Request account updates, retry
conservativelyRestricted / Lost / Stolen Card Beware of card testingCVV Decline Remove CVV
for recurring payments
The Next Frontiers in Payments DataIssuer Data and Wallets
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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
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And what about wallets?
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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!
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Trivia #3 – Global Expansion
• Which is happening in Brazil?A. Tourists fretting about ZikaB. Olympic athletes dealing with raw
sewageC. Live impeachment hearings of President
RousseffD. All of the Above
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Trivia #3 – Global Expansion
D. All of the above
What every online seller needs to know about sales taxShane RatiganSept 13, 2016
“We don’t want to grow our business” - said no successful company,
ever.
Where is your company obligated to comply with sales tax rules?
• This is The Threshold Question for E-Commerce Sales Tax Compliance
• Decide if what you sell is Taxable in those places only after you learn where to look.
Businesses need to reach customers quickly to stay competitive
• Manage inventory in new places• Distributed warehouses• Fulfillment by Amazon• Drop shipping• Affiliate Advertising• 1099 contractors or sales people• Installation, Support, Maintenance
More tax laws being considered
• Amazon Laws • Economic Nexus Laws• Streamline Sales Tax (SST)• Marketplace Fairness Act (MFA)• Online Simplification Act
…which can increase your tax exposure!
• Taxability• Exemptions• Special Rates• Sales Tax Holidays• Bundling• Digital Objects, Software, Services
Now you know where you should comply, so comply!
Not to mention…
12,00070,00014,000
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
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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.
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Trivia #4 – Facebook Future
A. Acquisition of all known competitors
Identity Verification for Digital CommerceKatie McGinn, Account Executive eCommerce Whitepages Pro
Jason Cheung, Fraud Operations ManagerTireBuyer.com
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Fraud Operations Manager
Jason CheungJason is the Fraud Operations Manager at TireBuyer.com. He has been working in the risk space for the past 14 years, previously working in ID theft and risk analysis for new and existing programs and services at T-Mobile U.S.A. He currently serves on MRC’s Fraud Committee.
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TireBuyer.com, is part of the largest tire and wheel wholesaler in the U.S. and Canada. American Tire Distributors (ATD) Tire Buyer is an online retail channel for ATD– It leverages ATD’s 100+ distribution
centers, and thousands of locations within their dealer network to provide tires and wheels at competitive prices, with the quickest delivery possible.
Many items qualify for same day delivery to a partner dealer without any additional shipping costs.
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Tires often cost $400+ a set, and are very expensive consumables with an average replacement cycle of 18-36 months. They’re not a luxury item, for most people they’re a life necessity.Tire Buyer experiences many different levels of fraud: • Individual friendly fraud (e.g. paying for 2
tires and claiming they never arrived, etc).• Small localized fraud groups who would
like these products for personal use.• Large domestic fraud groups who resell
locally and regionally.• International fraud groups attempting to
export the items to their native country (e.g. Russia, Ukraine, Ghana, Venezuela, Mexico, etc).
Local Economies Versus Global Product Costs & Availability = Fraud Drivers
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Decrease in Fraud Rates
Source: CyberSource Annual Fraud Benchmark Report North American Edition 2016
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Increase in False Positives
Source: CyberSource Annual Fraud Benchmark Report North American Edition 2016
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How Whitepages Is Leveraged
How Whitepages Is Leveraged
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How Whitepages Is Leveraged
How Whitepages Is Leveraged
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How Whitepages Is Leveraged
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ONLINE ORDER PLACED
Phone NumberSUBSCRIBER NAMELINE TYPECARRIER
COUNTRY CODEIS CONNECTEDIS VALIDIS PREPAID
GEOLOCATIONIS PROXYDISTANCE TO
ADDRESS
IPDISPOSABLE EMAILFIRST SEENPREFERRED NAMEVALID STATUSIS AUTO-GENERATED
LINKED TO PHONELINKED TO ADRESSLINKED TO EMAILFAKE OR CELEBRITY
NamePHYSICAL LOCATIONUSAGE TYPERECEIVING EMAILRESIDENT NAMEDELIVERY POINT
Address
Double-Digit Reduction in Insult Rates
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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
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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
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Questions?
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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
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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
emailmembership@merchantriskcouncil.org
Contact the MRC
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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
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Trivia #6 – Fraud Attacks
B. Targeting phishing leading to wire transfer fraud
What’s Top of Mind in Payments and Fraud for Microsoft, Zillow, and Expedia
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Meet the Panelists
Justin Wang Scott Engel Guilherme Grund-Rafols
Data Scientist Director of eCommerce Payments
Payments Product Manager
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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
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Getting Started!• Intros• Key Issues• Mistakes• Consumer Trends• Privacy Issues
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Broader Industry Trends
• Focus on Conversion
• Account Takeover
• EMV/ Chip & PIN
• Non Fraud coded chargebacks
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Even More!• Maximizing the Power of Data• Consumer Engagement• Who is Breaking New Ground?
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Meet the Panelists
Justin Wang Scott Engel Guilherme Grund-Rafols
Data Scientist Director of eCommerce Payments
Payments Product Manager
What’s Top of Mind in Payments and Fraud for Microsoft, Zillow, and Expedia
From Seattle Start-up to Global Payments Powerhouse: The Remitly Story
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Alex AlgardFounder & CEO, Whitepages
• Alex Algard founded Whitepages in 1997, which has grown to become the leading provider of contact information in North America, with a top-40 web property, 10 top-ranking mobile apps and over 55 million monthly users.
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Matt OppenheimerCo-founder & CEO
• Matt Oppenheimer is the Co-founder and CEO of Remitly, the largest independent digital money transmitter in the United States, whose customers transfer more than $1 billion annually.
• Remitly is disrupting the broken $588 billion remittance industry with its mobile-first money transfer service that is easy, affordable and secure.
• To date, Remitly has raised more than $60 million from leading venture capital firms.