Oemar Ahmad: maximize merchant revenue by eliminating the fear of fraud

Heaptalk Team, expert talk . 27 Sep 2021
Oemar Ahmad: maximize merchant revenue by eliminating the fear of fraud

Heaptalk, Jakarta — The increased growth of eCommerce creates more opportunities for fraud. This is one of the most pressing issues confronting Indonesian merchants today, with the tendency to fraud may affecting their performance and revenue.

Oemar Ahmad, Country Manager at Vesta Indonesia, emphasizes that Indonesian eCommerce should pay attention to fraudulent transactions in order to drive merchant growth. The problem is along with the eCommerce industry grows, so do the cases of fraud raises.

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“This is the vision of Vesta that we want to help businesses drive growth by managing their fraud risks and revenue losses. This is particularly important in Indonesia where we have the largest eCommerce market in SEA, with MSMEs as the backbone of the local economy,” Said Ahmad.

Vesta intends to uphold this aspect since the eCommerce sector is a key driver of economic growth for Indonesia even amidst the pandemic, growing 54% from 21B USD in 2019 to 32B USD in 2020, and projected to reach 83B USD by 2025, according to the e-Conomy SEA 2020 Report by Google, Temasek and Bain & Company.

While the merchant, considered as Micro, Small, and Medium Enterprises (MSMe) is the backbone that propels the Indonesian economy, which includes the creative industry, food and beverages, services, supply chain, and a variety of other fields.

In case of volume, eCommerce transactions continue to rise year after year. According to the survey by Bank of Indonesia, Indonesia’s transactions will reach IDR 266.3 trillion by the end of 2020, representing a 29.6 percent increase over the previous year. The most significant thing is that during the pandemic period, people began to highly shift to digital transactions.

Value for Indonesian MSMe

As Country Director for Vesta Indonesia, Oemar Ahmad, with his more than two decades of experience consolidating networks within the vast Indonesian economy, will bring key local insights and expertise from the financial services, enterprise solutions and digital solutions sectors.

Ahmad has previously consulted for Fortune 500 companies including Accenture and Citibank, as well as PT. Collega Inti Pratama, Indonesia’s largest ICT service provider for Regional Development Banks.

With his experience, both as advisory and consulting experience spanning financial services, IT and digital sectors, he wish to continue expanding Vesta’s presence in the country, supporting the company’s larger push within the Southeast Asia and Asia Pacific regions, to empower eCommerce merchants to grow revenue without the fear of fraudulent transactions.

“The average online merchant does not have a fraud problem. They have a revenue problem. At Vesta, we want to help businesses drive growth by managing their fraud risks and revenue losses,” said Ahmad.

Mitigating the fraud process

Oemar Ahmad is in charge of mitigating the fraud process, which is a difficult task. Because of the pandemic-induced digital migration, many new Indonesian merchants who go online face a lack of technical skills and know-how to prevent fraud, resulting in revenue loss. This is a legitimate concern, and it is only going to get worse as fraud evolves at a rapid pace in an on-demand digital world.

Besides that, The accelerated eCommerce growth brings about more opportunities for fraud. While bringing benefits to businesses in terms of higher transaction volume, this accelerated growth in eCommerce amidst the pandemic has also brought along a spike in the frequency and complexity of online fraudulent activities, eroding bottom lines.

“As it is, payment fraud incidents in SEA already outpace the global average — in Southeast Asia alone, the rate of attempted fraud is up to 12 times greater than the global average and online merchants lose an average of 1.6% of revenue to direct fraud each year. This is a concerning trend, set against the backdrop of Indonesia’s booming e-commerce sector,” said Ahmad.

The importance of fraud handling

Before eliminating the fear of fraud, we have to know the potential cases of fraud mostly found. According to Oemar Ahmad, the fraud consists of e-payment fraud, or online payment fraud which is any false or illegal transaction done on the internet. This can be the act of completing a transaction without the intent to pay. The spectrum of fraud techniques constantly grows, and this makes it challenging for any retailers with a digital presence in this day and age.

These e-payment frauds result in a serious impact on bottom lines, which can be detrimental to all online retailers. While direct fraud loss – the amount that was fraudulently used for a purchase – makes up a significant component of the total cost of fraud, it is also the catalyst for loss in other operational areas of their business.

Fraud attacks can also damage consumer trust and brand reputation if payment options are perceived to be not secure. Not only will consumers refuse to interact with online retailers in the future, they are also likely to tell others about their experience. This can quickly result in a significant amount of lost revenue.

The most potential fraud cases

The spectrum of fraud techniques constantly grows in sophistication, and this creates an exceptional challenge for businesses with a digital presence in this day and age. According to findings from our inaugural Vesta Online Payment Sentiments Survey, almost 3 out of 5 (57%) of online shoppers in Indonesia share retail accounts with their loved ones. Account sharing in this manner increases fraud risks through fraud methods such as account takeover.

  • Some of the most common types of payment fraud are: Card-not-present (CNP) fraud: This is a significant concern faced by all online retailers. CNP fraud refers to illegal purchases using stolen payment information. This can take place via any digital channel purchases without a card physically present. The can lead to large Chargeback cost incurred by the MSME
  • Account Takeover fraud: This is a form of identity theft where a fraudster illegally gets access to a victim’s bank, eCommerce site, or mobile wallet accounts. A successful account takeover attack leads to many fraudulent transactions and unauthorised shopping from the victim’s compromised account.
  • Card testing fraud: is a fraudulent activity, where a fraudster tries to test multiple stolen cards by making many small purchases to check if the cards are active and if the purchases avoids the MSME fraud detection measures. When it does beat the measures, they conduct a brute-force attack

Increasingly, fraudsters are also targeting mobile app users. In these volatile times, there is an urgent need for merchants to prioritise mobile-first fraud protection solutions, given that Indonesia is a mobile-first economy, with 96.4% of internet users connecting to the Internet via smartphones, and mobile connections increasing by 4 million (or 1.2%) between January 2020 and January 2021, according to DataReportal’s Digital 2021: Indonesia Report.