Risk management in e-commerce transactions
These risks may relate to internet fraud, information security, payment methods or even e-commerce legislation. Once getting into one of those risks, it would be costly for business to solve and to recover. Each year, it costs e-commerce and direct marketing businesses billions of dollars annually, making it imperative for merchants to understand the risks associated with doing business online. So business owners should develop an internal policy to address the potential risks and train your staff on implementing it. Following are the most important procedures for managing risk in e-commerce transactions.
1. Understand the risks and train your staff
Your staff should know clearly what risks your e-commerce business may have to deal with. Everyone in your business structure needs to understand the types of risks inherent in online payments. Then, establish a procedure on avoiding and solving risks, which is a must for all staff to follow.
2. Ensure information security
Information here includes customer databases, buying requests, payment process.etc. Internet is easily hacked by hackers so you need to ensure good security all the time to avoid data being changed or stolen. You need to set up a secure and efficient process for submitting authorization requests over the internet, before you can start accepting card payments online.
3. Select the right acquiring bank and merchant services provider.
The right acquiring bank and merchant services provider will provide effective risk management support have a complete understanding of e-commerce fraud risk and liability associated with online transactions. You will also want to consider an adequate customer data protection capability when making your selection.
4. Create and display effective policies
Your website must list your privacy, shipping, return and refund policies on each page. Customers should not be forced to search for them. This will also create satisfaction and convenience for customers to visit your page more often.
5. Use collection efforts to minimize losses
You have control over most types of charge-backs and especially the ones resulting from processing errors. A well-designed collection system can help recover unwarranted chargeback losses.
So, all methods above are just some among a lot of methods to limit risks in e-commerce transactions. You should follow these suggestions to develop your online store more effectively.