EXCLUSIVE: ‘Hot to Shop’ – Nick Fisher, JCB in ‘The Fintech Magazine’
Despite international travel bans, the UK remains the shopping destination of choice for millions of JCB card members in Asia. Nick Fisher, General Manager for UK Sales & Marketing, says multi-factor authentication won’t put them off
Name the keenest region for buying UK consumer goods. Still thinking? According to international payment giant JCB, it’s Japan.
Figures from its 2021 Business Without Borders report, show shoppers in its home country simply cannot get enough of the stuff: 73 per cent of JCB’s Japanese cardmembers are doing most of their virtual shopping with UK retailers – up from 59 per cent in 2019.
Meanwhile, its Chinese users have clearly been enjoying a virtual trolley dash around UK department stores. These destination retailers – normally high on Chinese tourists’ must-see lists – also saw their share of online spend increase substantially over 2019/20. JCB cardmember spending patterns in other countries in the Asia Pacific region showed a similar trajectory. Pent-up demand resulting from their inability to visit outlets in person during the pandemic, means any retailer not offering them online purchasing power is missing an expensive trick.
Pre-pandemic, analysts predicted that shoppers from the APAC region would be spending $32.6trillion by 2026; JCB itself witnessed e-commerce spend in Europe and the UK ramp up 300 per cent in the three years prior to the pandemic, largely fuelled by a perception that the region’s goods are of a higher quality than those they buy at home. And travel bans clearly haven’t dampened their enthusiasm. But there’s a problem. The average online cart abandonment rate among shoppers in the Asia Pacific (APAC) region is the highest in the world. They walk away from purchases 76.3 per cent of the time, leading to an estimated annual loss of as much as $18billion for merchants worldwide.
So, it’s critical to make the path to a sale as frictionless as possible for those customers, says JCB’s general manager for UK sales and marketing, Nick Fisher. And that’s a challenge for merchants, particularly in the UK and Europe, where tightening payment security protocols adopted by all the global card schemes could, it’s been suggested, push cart abandonment rates higher. Fisher is confident that retailers can continue to benefit from the current digital bonanza if they’re alert to what attracts – and dissuades – digital visitors in Southeast Asia from using their shopping channel.
As much as these shoppers might have a low threshold to clunky digital journeys, they place a high value on security.
“In fact, the compromise of an individual’s data is one of the key threats to the success of e-commerce,” says Fisher. Deloitte’s 2021 report, Emerging Digital Life In South And South East Asia, points to the fact 32 per cent of Thai technical professionals, for example, had personally experienced e-commerce payment fraud in the past year, an example of Asian consumers’ growing awareness of their vulnerability. Which is why, JCB has introduced its own, updated version of *EMV 3-D Secure, J/Secure™ 2.0, which helps bring the card scheme into line with Strong Customer Authentication (SCA) regulations being introduced in Europe, requiring all merchants and payment services providers to introduce multi-factor authentication (MFA) of the payer.
Subject to a transaction risk analysis (TRA), there are permitted exemptions to that, but Fisher believes it’s important that JCB implements the most secure protocols, and that need not compromise the customer journey; it’s a matter of merchants adopting the right technical approach. According to independent user experience research group, The Baymard Institute, the top reason for card abandonment (at 49 per cent), is not the hassle caused to consumers by additional security checks. Its hidden costs, like shipping, taxes and fees, which only became evident at the checkout.
Another 24 per cent of shoppers are put off by the need to set up an account, it found, while 18 per cent lost patience with the time that it took to complete a purchase. So, Fisher has some timely advice for European retailers who are targeting its card members.
“I would make sure that the JCB logo is prominently displayed across the website, for example, in the FAQs, on the shopping cart page, and anywhere else where the payment options are displayed. “I would also make sure that the delivery and returns policy is clear, and supports international shipping to the markets that they’re actually targeting. And be clear on the total shipping costs and local taxes that are applicable. Be very, very transparent on the upfront cost, to avoid abandonment at the final checkout.
“I would also make sure that the registration process is as simple as possible, and offer a guest option to support customers who are not ready to commit to share their data yet. “Then, I would offer the customer the option of transacting in their local currency. According to data from BlueSnap, offering currency transactions can see the conversion rate can go up by 12 per cent. This is further supported by local language websites, and offering chat functionality.
“Finally, I would ensure that the latest EMV 3DS level 2.2 is implemented, which also has the functionality to support more complex sectors, such as travel, and try to reduce the checkout friction as much as possible by using the TRA exemptions to speed up the checkout process. Ultimately, we want the smoothest process, from click, to buy, to then deliver. But one of the greatest threats we all face in this digital world is theft of our identity.”
With gross fraud losses for card transactions predicted by data provider Nielsen to exceed $40billion by 2028, safeguarding customers clearly doesn’t just come down to the merchants, though. Indeed, Fisher argues for a three-part plan to beat fraud, underpinned by collaboration within the payments industry. “Through communication, we need to educate both the cardmembers and businesses by sharing best practice to spot a fraudulent situation,” he says.
“Businesses, ultimately, need to be given the tools to be able to recognise if the customer is genuine. The industry should create a best-in-class service that includes payment solutions, but also regulation support, security advice and data protection guidance. “Consumers also need to recognise the value of their own personal data, and banks should be educating them better, by explaining why they need to protect their identity carefully, and the consequences of not doing so, for example sharing it on open social media sites.
“Banks need to educate their business customers on what the financial penalties could be, if they were to have a breach.
“The second way to address fraud is through regulation and technology. While, in most European countries, stronger authentication principles have been introduced, AI can help make quicker, smarter decisions, by minimising the false positives, automating the TRA exemption rules and, ultimately, trying to balance the reward versus the risk as much as possible.” JCB requires licensees to meet Payment Card Industry (PCI) Data Security Standards.
“By adhering to the PCI DSS rules, companies have a practical framework to reduce payment fraud by focussing on the security controls around handling customer data,” says Fisher. “The PCI DSS 12-point checklist provides them with practical steps to help protect against data breaches, and headline-grabbing fines.
“The third element in fighting fraud relates to card scheme operational rules, especially management of disputes through the chargeback process. “The structure of card scheme operations means that, unlike cash, there is a set of rules that ultimately determines the liability, giving consumers confidence to use their card in e-comm transactions. Consumers know they’re not on their own if a transaction turns out to be fraudulent.”
Harnessing biometric authentication to combat fraud is a long-term goal for the payments industry. JCB, for example, is considering partnering with a Japanese start-up to use palm vein authentication. But the challenge for the sector is to reassure consumers about the security of such technology, while not piling too much additional cost on merchants by compelling them to use complex software.
One way to avoid that is to standardise the process of tokenising biometric data and using point-of-sale infrastructure to provide a device-based solution, such as thumbprint, palm vein or online facial characteristics.
Fisher sees the use of contactless payments tokenisation becoming much more widespread in online transactions. “Linking the phone to the shopping cart reduces the risk for the consumer, but also for the merchant, and potentially bypasses some of the challenges of processing an e-comm payment,” he says.
As JCB cardmembers flock to the UK’s online checkouts, who they share their details with and who they trust to protect them, might well dictate which businesses benefit and which don’t.
*EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo