Finding the Right Balance Between Preventing Fraud and Providing a Smooth Customer Experience

Think of a customer who wants to purchase a product from your online store. With a full cart, they press the “Buy” button—only to find they must log in to their account first. They don’t quite remember their old password, so they go through the tiresome creation process and set up a new one.

At last, your customer is ready to buy—but now has to supply a second code from their phone. And the phone is upstairs. So they go up and down the house and input the codes.

Finally, they can buy—but now their cart has timed out. They would have to re-find their product from your catalog. Frustrated, they abandon their purchase.  

Good security is critical. Without fraud protection, a customer won't feel comfortable making a purchase from your store. However, too much security friction can have a negative impact, as excessive precautions inconvenience buyers and disrupt the checkout process.

So what can you do? Here are some steps to help you balance high-grade security with unobtrusive friction. ‍

1. Understand Your Customers

First, get to know your customers (and place them in different risk segments). Each consumer will have a distinct level of risk based on past actions. When you segment according to that behavior, you can personalize security measures accordingly.

As an example, consider two different clients. One is a long-term customer with a long-standing history of secure payments. The second is a brand-new customer with zero data history or analytics.  

Clearly, it is much easier to build a usable risk profile with the priority customer. Years of behavioral data give you context. And that makes it simple to adapt your defenses. With low risk levels, you can allow security to be less intrusive. And when risks are high, you can include a few more levels of protection. It makes for dynamic security that adapts friction strategically.

When possible, collect transaction, demographic, and behavior data. Then limit friction for those users deemed low-risk.

2. Leverage Advanced Defense Technologies

Second, use novel tools to build multi-layered security. Multi-layered security means setting up numerous prevention tools to fortify all possible angles of attack. That includes strategies ranging from perimeter security to threat intelligence to the actual physical defenses in your building.

As an example, you might use endpoint security to protect customer devices. At the same time, artificial intelligence will help with anomaly detection. And add-in intrusion detection to help flag risky profiles in your traffic. Each tool adds a layer.

Of course, the more layers you have, the harder it is for hackers. If they manage to surpass one defense, they still face twelve more. Their lateral movements are also restricted, as they cannot jump around your system without triggering other defenses.  

That kind of vigilance means you can lower friction in strategic security checkpoints. Phones equipped with the latest endpoint security could bypass some requirements. Or now that you have AI threat detection, you may reduce some verification requirements (vetted clients don't need to complete all of a CAPTCHA, a security question, and an email code—just one of two will suffice).

Integrate novel multi-layer defenses, that way you can earn some security flexibility.

3. Adopt Adaptive Authentication

Third, integrate newer authentication features. Authenticating someone is always a high-friction event because it requires the user to do time-consuming actions. Luckily, new solutions understand this problem and can keep you secure while remaining user-friendly. Consider the following:  

• Password-less Authentication: Get rid of cumbersome passwords in favor of hardware tokens, magic links, or authenticators (which have just as good, if not better, security).
• Biometrics: Streamline your authentication with biometrics. Unique biological traits are difficult to replicate yet provide friction-free logins for the correct user. And if you want the latest technology, use behavioral biometrics to track things like typing rhythm or navigation habits.
• Geolocation Analysis: Remove security steps for routine logins made at trusted locations. Your defenses will also increase because you can flag login attempts from foreign countries and unexpected places.
• IP Address Reputation: Lower security friction according to network. A corporate office or home can be trusted, but add extra defense for login attempts on public or open networks.

4. Educate and Empower Customers

Fourth, invest in customer education. Humans are often the weak point in a security profile. There is no need for a criminal to go through all the effort of hacking a password when they can just trick someone into giving it to them. And we all may fall victim to such scams.

Of course, customers aware of the latest schemes are less likely to be tricked. Someone up-to-date on the new lottery phishing email will trash that incoming message. Together, customers and businesses can limit fraud.  

Better yet, education campaigns lower friction. Or at least, perceived friction. A customer who understands the gravity of fraud will see multi-factor authentication as an important rather than an annoying step. They may also better protect their data and passwords.

No matter what, communication about security creates trust. And that strengthens the entire industry. Show how seriously you take protecting your customers to lessen the burden of security friction.

5. Monitor and Optimize

Fifth, stay attentive. The fraud economy does not stop, but continues to grow more sophisticated. Just like you, criminals take advantage of new tools and tricks.  

So if you fail to stay up-to-date, you will likely fall behind. This means it is important to engage in constant audits, reviews, and monitoring. Stay proactive to better face new threats as they emerge—rather than reacting.

For reactive security causes far too much friction. Delayed responses to incidents scare customers. Non-stop security alerts are unwanted interruptions. And constant patching and updates can annoy users.

Instead, mitigate risks in advance. Early detection lets you limit damage without alarming users. Better yet, craft feedback loops so customers can show possible vulnerabilities before fraudsters exploit them. ‍

6. Balance Transparency and Privacy

Lastly, communicate your security posture to your clients. That kind of open transparency is crucial for balancing security friction.

For example, think of a customer who can set their own privacy settings. That gives them a sense of control. Or consider a client who can clearly read why and how you will protect their data. That helps limit anxiety and confusion. The more you include the customers in the process, the more positive agency towards their own security they can feel.

These actions encourage positive security behavior. It also minimizes what might otherwise feel like an intrusion. Best of all, it keeps you compliant on all matters of customer privacy. Balance security without invading customer rights with good transparency.

Conclusion

Security is an all-important necessity. Customers do not want to give up their safety for convenience or streamlined checkouts. Safeguarding customer data is crucial to maintain a good customer experience.

But when possible, use the steps listed above to remove excessive precautions. You can be strategic in your security efforts. There are new methods available today that allow you to balance good security with minimal friction.

Want to know more ways how you can streamline your checkout while maintaining high-grade security? Talk to the experts at Chargeflow to learn more.