Today, sustainability is at the forefront of fashion brands’ minds, not just as a personal commitment but as a strategic approach to increase their bottom line. By demonstrating environmental credentials, retailers can differentiate themselves to compete better, justify higher costs, and increase customer loyalty.
However, payment fraud threatens this significantly. According to Nilson, online merchants will lose $49.32 billion to card-not-present fraud by 2030, money that is diverted from profitability and environmental initiatives. In Europe today, 3.5% of eCommerce revenue is lost to payment fraud.
To try and stem this, European brands currently spend 10% of their revenue on fraud prevention, increasing to 12% for SMBs with $50,000 to $5 million in eCommerce sales. 42% of European merchants say they will increase spending on fraud management tools and technologies in the next 2 years.
Yet, inefficient anti-fraud technology results in false declines, halting legitimate purchases and further adding to the cost. The majority of merchants cite false decline rates of up to 10% of total eCommerce orders. On top of this, fraudulent transactions lead to more returns, increasing landfill waste and CO2 emissions, as well as increased textile production to issue goods to illegitimate customers. Fraudulent transactions often cost twice the amount of the original sale, as retailers cannot recover the shipped goods and must also refund the scammed customer.
Last but not least, the resale of fraudulently acquired goods undermines official retail prices and damages brand integrity.
Fashion’s slow uptake of technology has to change. By implementing accurate, plug-and-play anti-fraud technology, brands can focus on other areas of business growth and environmental commitments.
For online fashion retailers to run a more sustainable business, embracing new technology is essential. Advanced anti-fraud solutions like Semla not only cut costs associated with fraud but also reduce environmentally damaging refunds.
Semla significantly reduces CNP fraud, refund costs, and reputational risk by automating CNP due-diligence processes via secure PSD2 processes. By integrating future technologies like Semla, fashion brands can enhance their sustainability efforts, protect their profits, and maintain customer trust.
With Semla, false positives are minimized, preventing legitimate orders from being mistakenly declined and ensuring a premium shopping experience.
