A new study from Juniper Research suggests that total losses to online payment fraud will exceed $343bn globally over the next five years, driven largely by fraudster innovation in areas such as account takeover fraud and identity theft. This is despite widespread use of identity verification measures.
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.
The research also found that 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. However, this will require significant capabilities to achieve.
“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, to correctly protect both merchants and users,” said report author Nick Maynard, head of research, Juniper Research.
The research identified physical goods purchases as the largest single source of losses, expecting this to account for 49% of cumulative online payment fraud losses globally over the next five years, growing by 110%. Lax address verification processes in developing markets are also a major fraud risk, with fraudsters targeting physical goods specifically due to their resale potential.
As such, it recommends merchants adopt strong anti-fraud measures, including multiple sources of address verification and multi-factor authentication, to reduce fraudulent incidents for physical goods merchants.