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February 22, 2017

How an e-commerce service's tolerance to payment fraud determines whether it optimises selling or security

How an e-commerce service's tolerance to payment fraud determines whether it optimises selling or security

The tolerance of an e-commerce service to payment fraud is its capacity to endure payment fraud without being adversely impacted.

Tolerance depends on gross margin. We advance that the lower the gross margin of an e-commerce service, the lower its tolerance to payment fraud. In the opposite, the higher its gross margin, the greater its tolerance.

Tolerance defines what an e-commerce service optimizes. Whether an e-commerce service is tolerant or intolerant to payment fraud changes what the e-commerce service optimizes.

  1. If an e-commerce service is tolerant, it strives to sell as much as possible and acquires payments at a lower security level.
  2. If an e-commerce service is intolerant to payment fraud, it needs to avoid payment fraud and therefore it needs to acquire payments at a high security level.

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