What Merchants Should Know About BOPIS in 2021 and Beyond
The pandemic has accelerated the rise of many existing trends over the past year, one being the buy online, pick up in-store (BOPIS) delivery channel. For merchants that already had this option available to consumers prior to the pandemic, transactions through this channel increased 70 percent by volume and 58 percent by value in 2020, according to ACI Worldwide data.
Stay-at-home restrictions due to the pandemic prompted consumers to turn to e-commerce for all their shopping needs. Ordering products online and picking them up in-store (or in parking lot) became the safest and quickest way to get their items without spending time inside the store itself. As a result, many merchants that had not implemented this delivery channel prior to March 2020 needed to ensure it was available during the pandemic.
In 2021, the BOPIS trend is expected to remain post-pandemic, though the success of it is highly dependent on the strong fraud measures that merchants put in place. ACI’s data showed that BOPIS fraud has seen a significant increase since the pandemic, with a 7 percent fraud attempt rate compared to 4.6 percent with other delivery channels. BOPIS has been as beneficial to fraudsters as it has been to genuine consumers. Fraudsters take advantage of the short window between purchase and collection and avoid Chip and PIN or Signature verification. With changing customer and fraudster behaviors, plus the increased risks that come with greater digitization, merchants need to work intelligently and more proactively in 2021 to optimize conversion rates while accurately blocking fraud.
Managing BOPIS Fraud Without Friction
Because BOPIS is a card-not-present channel, fraudsters tend to take advantage by using stolen card information avoiding smart card terminals. Therefore, merchants need to scrutinize each transaction while ensuring genuine customers can complete a purchase without any friction. With global consortium and merchant cross-channel data, merchants can delineate between genuine and fraudulent behaviors by better understanding customer behavior across all channels. For example, the increase in e-commerce transactions due to COVD-19 led to many first-time BOPIS customers who already had shopping histories with particular merchants (because of their ship-to-home delivery method). Merchants could use this information to verify genuine customers picking up their orders in-store and keep fraudsters at bay. Knowing customers across all channels is necessary for merchants to provide a fast and frictionless purchasing experience.
Additionally, innovations like positive profiling can reduce false positives and enable merchants to quickly identify good customers from bad, speeding and securing transactions for both long-time and new customers. It also allows merchants to remove unnecessary barriers to purchase. Ultimately, a multilayered approach of machine learning, analytics, artificial intelligence and human strategies is required to address varying channels and fraud types while also staying compliant with regulations.
Another method merchants can use to stay on top of BOPIS fraud is intervening at the time of purchase and at the point of collection so consumers can enjoy the benefits of this channel and prevent fraudsters from taking advantage of this card-not-present transaction. One way to do this is by enabling Chip and PIN authorization in-store to prove that the individual collecting the goods knows the PIN code. In addition, notifying in-store associates about an approved order and training them to verify a customer’s ID along with the credit card used to make the purchase can go a long way in preventing fraudsters from taking advantage of this newer channel.
The pandemic has changed consumer behavior in numerous ways, and many won’t be going back to the way things were. Digital payment services have become a way of life. Merchants must manage this shift by adapting to meet the demand for flexible journeys and enable customers to interact easily across channels — for both purchases and returns. In addition, merchants must ensure that newer services like BOPIS include protection from fraudsters without risking the customer experience.
Erika Dietrich is vice president for global risk services at ACI Worldwide, a global software company that provides mission-critical real-time payment solutions to corporations.
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Erika is vice president for global risk services at ACI. She leads a global team of Certified Fraud Prevention Analysts located in six countries, who service thousands of hosted Merchants and Financial Institutions' fraud prevention strategies in a partnership approach.