With Christmas around the corner, most shops and businesses have dusted off their decorations and braced themselves for the busiest time of year. While many bemoan how Christmas seems to come earlier every year, for some businesses it couldn’t come soon enough.
Shoppers have already taken to the streets earlier than they would normally with 52% buying gifts earlier than normal, due to fears of shortages. And for many businesses this will be somewhat of a relief – in research commissioned Adyen 53% of retailers described this Christmas shopping period as “make or break” for them. The golden period will have even more pressure on it after months of supply chain disruption, staff shortages and the continuing effects of the pandemic.
Colin Neil is UK Managing Director of Adyen.
Against this backdrop, UK retailers also face an additional threat, with half anticipating a spike in fraud attacks on their businesses in the upcoming quarter, threating to dampen their Christmas cheer. For example, a recent cyberattack on Spar convenience stores, forced the retailer to accept cash only, or close their doors altogether.
So how do retailers prepare and protect themselves against this challenge?
The real risk to retailers online
The impact of the past 18 months cannot be overstated. With shop doors open only for a limited time and supply chain issues, the total retail sales volumes in 2020 fell by 1.9% compared with 2019 – the largest annual fall on record. As lockdowns eased and retailers could trade more freely once again, businesses quite literally could not afford the risk presented by fraudulent ecommerce payments and data leaks which could damage their bottom lines and reputations further in an increasingly competitive marketplace.
Retailers depend on Black Friday, Christmas and even the January sales to boost annual retail revenues, meaning any fraud attacks – whether via transactions or data breaches - can be even more catastrophic. Unfortunately, many are already feeling the pinch, with more than a third (37%) reporting an increase in fraud attempts on their business during the pandemic. Not only that, a quarter (26%) admit that they have fallen victim to fraud or data leak over this period previously, Adyen data revealed.
And with individuals and organizations reporting losses of £1.3bn to fraud and cybercrime during the first half of 2021, businesses have a responsibility to protect themselves and customers as best as possible in the lead up to the festive period.
Christmas customers are coming in-store
Fortunately for the retail industry, there remains an appetite for high street shopping to prepare for the Christmas season – forming a strong part of festive traditions and planning for the big day. This is motivating the majority of customers to carry on and not be perturbed from shopping in-store, with just less than a third planning to avoid shopping in person.
While this should be heartening for the industry, this support does not come without its underlying expectations. Wherever they are shopping, customers demand stand-out experiences in terms of being protected against fraud themselves. Not only that, but they will use it as a differentiator between competitors, as almost two-thirds (65%) said they will not shop with a retailer again if they have a bad experience. Fraud presents a real risk to both businesses’ profits and also how they fare when compared to their rivals – but it’s such a quick win for retailers to keep customers’ loyalty and trust through good customer experience.
Tech tools of the trade
With so much riding on the back of this festive season, and beyond, there is more pressure than ever on retailers and their payment providers to protect against fraud.
As fraudsters become smarter, so has the necessary technology to protect data and ensure safe transactions. Harnessing and effectively applying payments technology will be key to keeping payments experiences on track.
However, understanding the fraud landscape and the security solutions available can be a daunting aspect for retailers, especially when many of these solutions are offered in a multi-vendor, siloed approach. This leaves retailers with a number of different security platforms for their in-store, online and mobile solutions. With many retailers looking at delivering a unified commerce approach, a siloed approach can make things even more complicated as each channel brings its own risks.
Luckily, there are modern technologies that help retailers by providing a single, unified risk solution across all channels, while ensuring customers enjoy the smoothest, quickest possible payment experience. For example, AI and machine learning, featured in Adyen’s payment processing platform, are just two means to effectively help customers authenticate themselves quickly and easily. What’s more, using a single solution, payments data and customer purchase history can be taken into account across multiple platforms – ultimately helping to determine if a transaction is fraudulent.
As businesses capitalize on sales during the Christmas period, protecting profits and reputation has never been greater – in an ever increasing marketplace, where consumer expectations are high and further pandemic-induced restrictions loom.
With the means to safeguard against fraud so easily available, and often already on hand, there is little excuse for the retail industry to not properly prepare themselves this season. However, with the right tech and processes in place, this Christmas season can be as merry and bright as those before.
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Colin Neil is UK Managing Director of Adyen.