Online retailers will lose more than $25 billion over payment fraud by 2024, a Juniper Research study found. This is an increase of 52% in four years. At this moment, losses over payment fraud are estimated $17 billion.
Cause of this increase in payment fraud is the growing popularity of e-commerce in many markets. As online shopping becomes more popular, so does the use of card payments (e.g. Mastercard, Visa). Fraudsters target these payment methods more and more.
The researchers opt for a global solution in order to prevent the increasing levels of fraud taking place. They emphasise that online retailers all across the world should use a similar approach to Secure Customer Authentication (SCA). This system is currently being implemented in Europe. Accordingly, payment gateways are part of the solution. At the moment, two-step verification (a strong verification) before an order can be placed is such an example that is adopted at scale.
According to the research, it is important that retailers educate their customers about online fraud. Amongst others, online retailers should inform consumers about cybersecurity practices. Other awareness topics are common fraud methods and changes in the checkout process that takes place to help prevent fraud.
Due to the explosive growth of e-commerce, payment fraud evolved. Tactics fraudsters use change and merchants must adapt to that. An important part is to educate users in anti-fraud best practices. The study concludes that the human element consistently is the most vulnerable aspect of the online payment ecosystem.
Even though it is necessary to take measures to prevent online payment fraud, retailers must take possible consequences into account. For consumers, it is important to limit any increased friction in the checkout process. Retailers otherwise will face increasing rates of cart abandonment as the experience of consumers falls.