Online Payment Fraud Losses to Exceed $343 Billion Globally Over the Next 5 Years
A new study from Juniper Research has found that the cumulative merchant losses to online payment fraud globally between 2023 and 2027 will exceed $343 billion. As a comparison, this equates to over 350% of Apple’s reported net income in the 2021 fiscal year; showing the massive extent of these losses.
Online payment fraud includes losses across the sales of digital goods, physical goods, money transfer transactions and banking, as well as purchases like airline ticketing. Fraudster attacks can include phishing, business email compromise and socially engineered fraud.
Innovation Needed in Fraud Prevention Strategies
The research found that in order to combat rising fraud, fraud prevention vendors must orchestrate the right mix of verification tools, at the most effective point in the customer journey, to best protect users, but that this will require significant capabilities to achieve.
Report author Nick Maynard explained: “Fundamentally, no two online transactions are the same, so the way transactions are secured cannot follow a one-size-fits-all solution. Payment fraud detection and prevention vendors must build a multitude of verification capabilities, and intelligently orchestrate different solutions depending on circumstances, in order to correctly protect both merchants and users.”
Physical Goods Largest Fraud Area online payment fraud
The research identified physical goods purchases as the largest single source of losses; accounting for 49% of cumulative online payment fraud losses globally over the next 5 years, growing by 110%. Lax address verification processes in developing markets are a major fraud risk, with fraudsters targeting physical goods specifically, due to their resell potential. As such, it recommends that merchants adopt strong anti-fraud measures, including multiple sources of address verification and multi-factor authentication to reduce fraudulent incidents for physical goods merchants.
How to Prevent Payment Fraud? Online Payment Fraud
- Social media lookup: We can see if the cardholder’s details match those of the online social profile. It helps extract extra info such as a profile picture, full name, bio, etc…
- IP analysis: Beyond checking geolocation, you can also tell if your user is hiding their connection behind a VPN, proxy or emulator.
- Email analysis: Even a single data point such as a phone number or email address can reveal a trove of data. Was it created from a suspicious domain (free or disposable address)? How hard was the authentication process? Has it appeared on any data breaches?
- Phone analysis: Likewise, a phone number can be checked against a records to get a clearer idea of who you’re dealing with. Is it a landline or mobile? Is the carrier location close to the shipping address? Is your user relying on a disposable phone number?
All these extra data points will help you connect the user with the credit card information, and make a more intelligent decision when accepting or rejecting a purchase.
