Online Payment Fraud is costing billions to e-commerce businesses. According to a new study from Juniper Research, the value of losses due to eCommerce fraud will rise this year, from $17.5 billion in 2020 to over $20 billion by 2021; a growth of 18% over a single year! China is the biggest target for Online Payment Fraud perpetrators.
With the growing adoption of Online Payment modes, fraudsters are following where customers are heading online to pay for their items. Fraudsters have targeted consumers as they have increased their eCommerce use; exposing insecure fraud mitigation processes from merchants who are unfamiliar and unprepared for the continuing fraud challenges in this market.
Juniper Research has found that the value of losses due to eCommerce fraud will rise this year, from $17.5bn in 2020 to over $20bn by 2021.
What is Online Payment Fraud?
Any type of malicious or illegal transaction done using the internet is Online Payment Fraud. As the e-commerce industry heads toward becoming a $5 trillion economy in 2021, fraudsters are targeting gullible online shoppers with fraudulent schemes and click-bait activities. The objective of any Online Payment Fraud is to steal financial information, eventually resulting in financial loss to the customers and merchants.
One of the prime reasons why Online Payment Fraud events are rising is attributed to the growing popularity of digital payments in the e-commerce space. Customers are using “store card details” to digitally make financial transactions without doing enough to check and verify if their card details are stored safely and anonymously by the e-commerce payments service platform.
The gap in digital payments experience and security frameworks forces us to look at Juniper’s latest findings with heightened seriousness.
AI to the Rescue against Online Payment Fraud
In another research, Juniper had forecasted online sellers risk losing $130 billion to Online payments fraud between 2018 and 2023. Clearly, online fraud is a top concern for online sellers even as e-commerce merchants are fighting their way out through the pandemic period. Losing money to digital payments frau is the last thing online sellers would want to suffer.
The research identified that merchants need to do more to implement fraud prevention strategies across all of their eCommerce channels, or they will continue to experience large losses. The use of AI will enable behavioral biometrics in this area, which will increase security across all potential fraud channels.
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Increased Security Must Not Involve Increased Friction
The new research, Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2021-2025, found that while merchants will be keen to reduce fraud rates from their current levels, they will be hesitant to introduce extra friction into the checkout process. The report identified that clear messaging around security checks and automated behavioral analytics leveraging AI are key capabilities in preserving the user experience.
Research co-author Susan Morrow explains: “While the need for security is greater than ever, the competitive eCommerce environment means merchants will need to ensure that extra security checks are justified to the user, or they risk higher cart abandonment rates.”
China Will Be the Single Largest eCommerce Fraud Market
The research also found that China will be the largest single eCommerce fraud market in the world; accounting for over 40% of eCommerce fraud losses globally in 2025, at over $12 billion. The research identified a massive eCommerce market and a relative lack of fraud detection and prevention platform deployment as the key drivers behind this. The research recommends that merchants operating in China should invest in fraud detection and prevention now, or they will increasingly face damage to their already slim operating margins.