Online shopping has become a major avenue for consumers to compare products, read reviews, and find deals. With major companies like Best Buy and Target having online portals and major companies like Amazon providing goods at discounted rates, the online marketplace has solidified as an industry, but not without its challenges.
According to Statista, those shopping online spend considerably more money than when shopping in-person. This is likely due to the presence of deals, which encourage buying in bulk. 48% of consumers know what online store they are going to buy from, as they already know where to look for a product before purchasing it.
With global e-commerce sales generating $1.2 million every 30 seconds between desktop computers and mobile devices, the importance of a site’s transactions being secure has risen tremendously with each year. Data breaches totaled over 1,500 worldwide in 2014, up 46% from the year before. This led to the compromising of over one billion data records.
While the intent of those data breaches varied, the broad strokes fall into three categories: 54% related to identity theft; 17% to financial access; and 11% to account access. With the privacy of consumers an extreme issue when it comes to online transactions, many companies are turning to credible payment processing companies to add security.
A payment processing service works by creating a digital payment gateway. This is for the processing of transactions that include a credit or debit card. For consumers, this creates a level of protection, specifically through data encryption techniques (the maximum is a 256-bit encryption, which is tough for all hackers to break).
For companies, a payment processing service helps with authentication of the purchase and identification of the consumer. Often, a payment processing service may even send a text message or email to the consumer prior to the transaction being completed. All of these aspects to a payment processing service make the transaction more secure.
Payment card fraud costs billions of dollars to the world’s economy every year. In 2015, the cost was nearly $22 billion, with the number expected to rise to over $31 billion by 2020. In the U.S., the number is $8 billion annually. One of the consequences of this is the number of chargebacks to American consumers.
A chargeback is a process that can occur after a card not present transaction. A card not present transaction occurs whenever a credit or debit card is used for a transaction but not physically handled by an employee of the company. This essentially describes every online transaction.
A chargeback is a useful form of protection for consumers, especially in the case of identity theft. But it is costly for online businesses, who may suffer for their lack of security measures to keep transactions secure. An additional layer of security can be necessary, whether in the form of a payment processing service or another method.
