Optimize Your Manual | Payment Processing Solutions | Credit Card Processing

Written by Benjamin Grossman | Jan 29, 2016 5:00:00 AM

Optimize Your Manual Review Process in 2016

From single owner e–commerce store fronts to major online retailers, many businesses that rely on card–not–present (CNP) transactions for revenue are still saddled with a slow, ineffective method of fraud prevention known as manual review. Facing rising fraud rates in 2016, these businesses are recognizing that using manual review, while a critical part of preventing fraud, takes too much of their time and leads them to decline too many orders, stagnating growth.

The Problems with Manual Review

E – commerce business owners are all too familiar with the shortcomings of manual review:

It’s expensive. Manual review takes time and focus, often from a dedicated team of reviewers. The resources businesses put toward manual review can quickly add up to represent the biggest line item in a fraud or loss prevention budget.

It’s inefficient. Merchants who conduct manual reviews analyzed 27% of transactions in 2011, according to a report from fraud prevention leader . Of the orders that underwent manual review, an average of 75% were ultimately approved. A reviewed – to – approved ratio that high represents in efficiency in targeting questionable transactions.

It’s not scalable. With about one – in – four orders undergoing manual review, the owner of a small e – commerce business finds him or herself able to easily manually review 100 transactions per month without hi ring more staff. But 1,000? What about 10,000?

It slows down your customers. Emerging business models that utilize in – app purchases, especially gaming platforms, face the reality that manual review of these instantaneous, often impulse – driven transactions, can slow down the customer experience and put a bottleneck into a major revenue stream.

Fraud Rates Nearly Doubled in 2015

So what do merchants have to show for the monumental cost of billions of manually reviewed transactions?A rising fraud rate, for one. As a portion of revenue, fraud was up to 1.32% in 2015, nearly double the rate merchants saw the year before, according to LexisNexis’ True Cost of Fraud 2015 Study.

Make no mistake; fraud transactions that are not caught can have devastating effects on a business: costly fees, strained relationships with third party partners and processors, lost revenue, sunk shipping costs, and even a spot on the Terminated Merchant File (aka the MATCH List).

A Balanced Approach to Stopping Fraud

None of this is to say that manual review should be put out to pasture. There are times when human reasoning is needed to distinguish between perfectly innocent transactions held up for administrative reasons and the truly shady orders that constitute real fraud. Without a reviewer using empathy to make a judgment call, you may decline (and alienate) a new customer or a loyal one.

Manual review, though, should be part of a balanced approach that uses to ols to optimize the process by providing more data for reviewers to use, and targeting fewer benign transactions for review in the first place. A few key areas hold opportunities to streamline manual review:

Embrace automation. Look for solutions that can cut your manual review rates significantly. Given the high average approval rate of transactions currently undergoing manual review, there are opportunities to review fewer innocent transactions and avoid hurting customers’ feelings.

Make it scalable. Bett er pre – screening and effective tools can help your review staff process more orders and give you space to grow.

Customize your process. When you put a software solution in place, be sure you model it for your business. Every e – commerce business is unique a nd the partners you choose should be flexible to fit your customers and your ambitions.

A more focused, effective manual review process can not only boost productivity, but can help revenues grow by increasing order approvals and free up resources to devel op new products, market your business, or hire new staff. Put tools in place that will free you up to get back to doing what you do best, making your customers happy.

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