BY Onome Amuge.
The cumulative merchant losses to online payment fraud globally has been projected to exceed $343 billion between 2023 and 2027, according to a new research report by Juniper.
The report, titled “Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2022-2027″, explaining the extent of the losses, said the figure equates to over 350 percent of Apple’s reported net income in the 2021 fiscal year.
Online payment fraud or fraudster attack, which is any type of false or illegal transaction executed online by a cybercriminal, includes losses across the sales of digital goods, physical goods, money transfer transactions and banking, as well as purchases such as airline ticketing, phishing, business email compromise and socially engineered fraud, Juniper explained.
It was further noted that online payment fraud losses are partly being driven by fraudster innovation in areas such as account takeover fraud, where a user’s account is hijacked, notwithstanding the wide employment of identity verification measures.
The research also identified physical goods purchases as the largest single source of losses, accounting for 49 percent of cumulative online payment fraud losses globally over the next five years, at a 110 percent growth.
Lax address verification processes in developing markets was also recognised as a major fraud risk, with fraudsters targeting physical goods specifically due to their resale potential.
Addressing online fraud through innovative strategies
To combat and prevent rising online fraud, Juniper advised vendors to orchestrate the right mix of verification tools, at the most effective point in the customer journey, to best protect users. It however noted that this will require significant capabilities to achieve.
The research also 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.
According to Nick Maynard, the report author, no two online transactions are the same fundamentally. As such, the way transactions are secured cannot follow a “one-size-fits-all solution”.
Maynard tasked payment fraud detection and prevention vendors to build a multitude of verification capabilities, and intelligently orchestrate different solutions depending on circumstances, in order to correctly protect both merchants and users.
