Don’t let risks hinder your success in online cross border trading - Gulf Business
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Don’t let risks hinder your success in online cross border trading

Don’t let risks hinder your success in online cross border trading

Managing the new risks in online trading effectively requires understanding of what they are and the available solutions, writes the regional head of PayPal

From UAE to USA, cross-border trade is booming. Increasing global prosperity and the pervasiveness of global internet connectivity is creating enormous consumer demand and global production.

While businesses around the world are excited to embrace these new opportunities, they may be exposed to risks that they have never encountered in the brick-and-mortar business world or in the domestic ecommerce market. Managing these new risks effectively requires understanding of what they are and the available solutions.

Understanding the Unexpected Loss – Chargebacks

A chargeback is initiated when the consumer contacts the card issuer to request a payment reversal. Chargebacks arise for many reasons, but these are some common ones:

1. The customer claims that the goods were not received;
2. The customer claims that the item received was significantly different from the seller’s description, or was damaged upon receipt; or
3. The customer claims no authorization was given for the transaction and that he/she is a victim of identity or credit card fraud.

Some of these chargebacks may be avoided by being responsive to customer feedback, maintaining clear return policies and, in the appropriate cases, issuing a refund before the customer requests a chargeback from the card issuer. However, if a chargeback occurs because the customer claims that the transaction was unauthorized, choosing the right payment service provider becomes important. For example, merchants would not be liable to pay for chargebacks for unauthorized transactions if they are eligible for coverage under PayPal’s Seller Protection.

Combating Online Fraud

Online fraud has been a major problem throughout the world – according to a recent global survey from PayPal and Ipsos examining the cross border shopping habits from consumers in 22 countries, 39 per cent of shoppers who aren’t buying from other countries cite concern over security as one of the reasons why they hold back from international purchases. Giving customers’ confidence in their payments as well as shipments processing is an essential part of selling to consumers abroad.

Sophisticated online fraud prevention strategies and tools are being adopted around the world to counter threats of online fraud like virtual identity and credit card theft. However, there are significant differences in the way these tools are used. To effectively combat online fraud, choosing a secure and trusted payment tool is critical for merchants selling abroad.

According to the 2checkout Fraud Index Report, merchants may assume a lower level of risk when accepting PayPal vs. other forms of payment. As a trusted third-party online payment platform, PayPal is widely recognized for its certified risk management system to help merchants identify and avoid fraudulent transactions at the earliest stage possible.

As soon as an order is submitted by buyers, PayPal’s risk models start to track and help predict fraudulent transactions simultaneously. When something suspicious is detected, professional review will be conducted by PayPal’s world-class risk management experts to determine whether the person behind the computer is a genuine consumer or possibly a hacker.

There are also actions merchants can take to identify potentially fraudulent transactions from stolen credit cards or accounts to minimize risks such as tracking and verifying the shipping address with IP geo-location services from search engines. Keeping customer records, building a buyer watchlist, setting limits for purchase, and contacting the customer to verify information are also good practices.

Merchants should closely monitor and evaluate shipping requests to high-risk countries, post-payment requests for address changes, multiple orders to the same address, and overpayment followed by requests for refunds via wire transfers, and other potentially suspicious behavior.

Reducing Cash Flow Pressure and Resolving Trust Issue

In an ideal world, merchants would want to receive payment before shipping out the goods and buyers on the hand prefer to pay only after receiving the goods. This problem is amplified for cross-border shipments as it could take a long time for the goods to reach the customer, depending on the mode of transportation. A longer shipment time means merchants may be faced with cash flow issue and the risk of a payment default.

Specific Fraud Prevention Support for High-Risk Industries

Risks vary from industry to industry. Due to the virtualization and easy-resale characteristics, industries such as digital goods, online flight reservations and hotel booking have much higher risks than other industries. Try to choose partners who can help prevent fraud. For instance, PayPal provides an industry anti-fraud guide for merchants to download via its portal site. As a trusted business partner, PayPal also offers customized risk management solutions to merchants.

Risk management is about determining the credibility of transaction parties within the shortest timeframe while balancing the risk and user experience. If the process takes too long, it may turn away customers. Therefore, it is important for merchants to choose the right solutions that will keep their business safer while also keeping their customers happy. Choosing a trusted payment service provider that has a comprehensive risk management system and advanced technologies will allow a merchant to focus their time on day-to-day operations.


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