Global online fraud is set to top $25 billion by 2020, more than doubling current levels, as security improvements in card present transactions drive scammers onto the web, according to Juniper Research.
The analyst claimed in a new study, Online Payment Fraud: Key Vertical Strategies & Management 2016-2020, that by the end of the decade, $4 in every $1000 of online payments will be fraudulent – that’s a total of $25.6bn.
A major contributing factor here is likely to be the current switchover to chip and PIN in the United States – hitherto a major market for POS fraudsters who typically scrape magstripe data from systems to clone cards for use in face-to-face transactions.
As fraudsters find this harder to do with chip and PIN, they’re likely to move online, where stolen card data can be used without the need to clone cards, Juniper suggested.
Top of the list when it comes to online fraud by 2020 will be e-commerce (65%), banking (27%) and airline ticketing (6%).
As for countermeasures, the fraudsters will continue to be one step ahead of the white hats, the report claimed.
Although some airlines have managed to reduce fraud levels through new tools, for example, scammers have merely moved on to softer targets in the industry that haven’t, the analyst said.
Also in banking, measures like 3-D Secure and device fingerprinting will only offer temporary respite before cyber-criminals find new ways to defraud companies, the report claimed.
However, that shouldn’t stop firms investing in the latest technologies like biometrics and cross-channel fraud prevention tools, according to report author, Gareth Owen.
“If they do not do this investment, then their fraud losses will be much higher. Yes, the fraudsters will move on as a particular security weakness or loophole is plugged, but so will technology,” he told Infosecurity.
“There also needs to be more cross-industry collaboration. There is a wealth of information available across the electronic payments ecosystem and that information could be used collectively to combat online fraud. All players, whether merchants, issuers, acquirers, processors, etc. need to take a wider shared approach to the problem if they are to seriously disrupt fraudsters.”