Global online payment fraud losses are set to soar by more than 50% over the coming four years to exceed $25bn per year, according to a new report from Juniper Research.
The market analyst’s report, Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2020-2024, predicted a 52% growth in merchant losses to scams over the period.
The growing popularity of online shopping combined with the enhanced security of card-present transactions through the EMV initiative is helping to drive much more fraud into e-commerce, the analyst claimed.
This is despite the launch of Secure Customer Authentication (SCA) checks in Europe, although this initiative has been delayed several times. The new rules, part of the EU’s PSD2 banking regulation, will now come into force by December 31 2020 in Europe and March 2021 in the UK.
They mandate that certain transactions be subject to two-factor authentication in order to help lock fraudsters out. However, there are concerns that SCA might also create extra user friction which puts consumers off.
Juniper Research urged merchants to work closely with security vendors to design and implement extra authentication checks in shopping apps that minimize friction.
It also argued that e-commerce providers must take a more educational role, providing information to customers on the need for improved cybersecurity and changes to checkout processes, as well as details on some of the most popular scams.
The analyst claimed this was particularly important in China, which it said will account for 42% of e-commerce fraud by 2024.
“The explosion of e-commerce means that fraudsters have evolved their tactics, and so merchants must also evolve,” argued report co-author, Nick Maynard.
“E-commerce merchants must educate their users in anti-fraud best practice, as the human element is consistently the most vulnerable to exploitation in the online payments ecosystem”.