LISNR’s Proximity Tokens Solve for the Rise of BOPIS and Curbside Pickup Fraud
Rise of BOPIS and Curbside Pickup Requires Better Fraud Prevention
When it comes to “buy online, pickup in store” (BOPIS) and curbside pickup, convenience can come at a cost to retailers. As these new shopping methods become increasingly common among consumers, so too does the risk of fraud and overall chargebacks.
That said, BOPIS and curbside pickup can be valuable channels for retailers. And as consumer preferences change, providing these options is becoming non-negotiable.
But if retailers — ranging from grocery stores to restaurants to department stores — want to get the most value out of these shopping channels, then they need to place more emphasis on fraud prevention and transaction authentication. Otherwise, issues like customers taking the wrong orders or disputing credit card charges will continue to plague merchants and issuers alike.
Shifts in Buying Behavior
Even before the pandemic, the writing was clearly on the wall regarding consumers shifting away from traditional in-store shopping. While in-store still has its place, more digital-oriented channels have been growing rapidly.
For example, US click-and-collect sales ballooned by 107% in 2020 to reach over $72 billion, finds eMarketer. Yet this trend is not limited to times of social distancing. “Shoppers embraced click and collect for the safety, but they will stay for the convenience,” eMarketer notes.
Going forward, Allied Market Research projects that global contactless payments will grow to over $5.4 trillion by 2027, up from around $1.2 trillion in 2019.
Benefits of BOPIS/Curbside
Both the BOPIS and curbside models seem likely to have strong roles going forward due to their multitude of benefits.
For one, they can provide a happy medium between the convenience of shopping online and in-store. Consumers can easily browse for the items they want online without necessarily having to wait as long as they would for delivery. It also may be more convenient to stop by a store to do BOPIS or curbside while out running other errands, for instance.
Meanwhile, retailers can benefit from these channels, not only by appealing to consumer demand but also by potentially increasing their own sales.
“A resounding 85% of shoppers say that they’ve made an additional in-store purchase while picking up an online order,” reported Business Insider Intelligence in 2019, based on data from Doddle. However, the benefits of BOPIS and curbside need to be weighed against the potential downsides.
Dealing With Chargebacks
One of the biggest issues with BOPIS and curbside, in comparison to traditional in-store shopping, is dealing with chargebacks, where stores credit customers back for purchases.
Chargebacks are especially challenging because they typically cost retailers more than the value of returned/credited items. “Chargeback fees tend to range from $20 to $100 but with operation and customer acquisition costs, companies often lose 2 to 3 times the transaction amount,” notes ChargebackGurus.
What causes the BOPIS and curbside models to be susceptible to chargebacks? There can be several reasons, such as:
- Inaccurate fulfillment: It’s easy for stores and their customers to make mistakes with BOPIS and curbside orders. For example, a retail employee may accidentally load the wrong order into a customer’s car. Or, a customer might walk into a restaurant and grab the wrong bag off a shelf full of BOPIS orders.
- Friendly fraud: Another big issue is friendly fraud, where customers initiate chargebacks for legitimate purchases. By 2023, friendly fraud will account for nearly two-thirds of chargebacks, yet retailers tend to underestimate this problem, finds Chargebacks911.
In some cases, these chargebacks might be accidents, such as if a customer doesn’t realize they added an item to their online cart while creating a curbside order and wants to return it. Or, they might be intentionally fraudulent, such as if the customer doesn’t like the item they purchased online after seeing it in person but doesn’t want to return it.
- Criminal fraud: Criminal fraud can also be an issue with BOPIS and curbside, much as it is for other online orders, because someone can use a stolen card to make a purchase, without necessarily having to authenticate themselves when picking up the order.
Overall, BOPIS has a 7 percent fraud attempt rate, which is much higher than the 4.6% rate for other delivery channels, according to ACI Worldwide.
The current BOPIS and curbside models tend to be conducive to chargebacks due to a lack of security and verification during fulfillment. If retailers want to reduce these costly issues, while also improving customer experience, then they need to adapt their authentication methods.
Manual methods like checking license plates or IDs can offset some of the convenience that draws customers to BOPIS and curbside pickup in the first place. Instead, retailers can use digital authentication methods like LISNR SDA.
Through proximity tokens, retailers can authenticate customers’ identities and proof of payment via mobile devices. By matching authorized customers to their individual purchases, retailers can improve fulfillment accuracy and reduce chargebacks, as they can then have a digital record that the right order was provided to that account.
Currently, most verification methods fall well short of matching the provisioned recipient to their specific transaction, in a simple and secure fashion. Methods such as QR code scanning are extremely inconvenient and only match the user account to the order at fulfillment. LISNR SDA goes the extra mile at preventing fraud while delivering a positive BOPIS and curbside experience
Want to learn more about how you can improve the customer experience while at the same time enhancing fraud prevention? Get in touch with LISNR today.