- The e-commerce platform Shopify has rolled out its Fraud Protect for Shopify Payments product, which it announced earlier in the year, according to a press release.
- Available to a select group of merchants in the U.S. for now, Shopify plans to expand the product to more customers in the future.
- The new anti-fraud product is designed to protect merchants from fraudulent chargebacks on protected orders and also streamline order fulfillment, the press release said.
The volume and cost of retail fraud has been increasing dramatically every year, and the scope has continued to broaden according to multiple studies. It's a problem smaller sellers and retailers are ill-equipped to deal with given the potential impact to their bottom line. Chargebacks, or reversals, are a longstanding issue retailers have struggled with, but the growth of online sales has added an additional layer to the problem.
Retailers reported a 30% jump in fraudulent transactions in 2018 compared with the prior year, according to the LexisNexis Risk Solutions 2018 True Cost of Fraud report. A separate report this year found that mobile was particularly impacted, according to German fraud prevention firm Adjust, with mobile fraud rates almost doubling in 2018 compared to 2017. E-commerce was the hardest hit category. The 2018 Fraud Attack Index from Forter found a 119% rise in return abuse in last year's fourth quarter. Total chargeback costs to retailers last year were $31 billion, said a report from Chargebacks911, and $19.4 billion of it was related to cyber-shoplifting.
With a dollar of digital fraud costing merchants $2.94 in 2018 — which was a year-to-year increase of 6% — as reported by LexisNexis, the problem can be devastating to smaller retail businesses like those served by Shopify, which has 600,000 active stores doing $72 billion in sales, according to the Shopify website.
Fraud Protect for Shopify Payments guarantees all sales to reassure smaller merchants, the press release said. There is a fee charged on a percentage of sale basis for protected orders. When a fraudulent chargeback happens, Shopify promises to compensate the merchant. Meanwhile, the platform asserts the fraud protection product’s streamlined fulfillment process will enable growing and larger businesses to attain lower operating costs and provide a better experience for customers, the press release said. The product is integrated with merchants’ stores with optimization for their sales.
The fraud protection product is one of many advances Shopify has implemented recently. The company added augmented reality features to its mobile commerce platform last month and added ShopGate as an m-commerce platform for merchants in July. In June, Shopify launched a free mobile app to connect the messaging apps its merchant customers already use, including Facebook Messenger, Rep.ai and Chatkit, to streamline their conversations. It integrated Google Pay into its payment system to offer shoppers a quicker checkout. Shopify also said it will open a physical store to sell point-of-sale equipment along with other products and services.