Retailers worldwide are set to lose some US$130 billion in digital CNP (Card-not-Present) fraud between 2018 and 2023, according to a new report highlighting the use of increasingly complex approaches by fraudsters.
According to global research firm Juniper retailers’ inertia in adapting to new fraud prevention requirements is contributing to the rising levels of fraud and the key factors behind the increases in fraud transaction value.
Juniper’s new research - Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2018-2023 claims that as cybercriminals seek to monetise their knowledge to a wider, less tech-savvy audience, complex cross channel fraud will become the ‘new normal’, with retailers ill-prepared to fight it.
The report found that ecommerce merchants remain, to a large extent, focused on assessing fraud risk at the point of transaction.
As such, analysis in terms of session and behavioural monitoring, or validating the identity of a user to assess fraud risk before any transaction, is lacking, Juniper notes.
And Juniper cites industry perception of FDP (fraud detection & prevention) as one of the reasons behind this, with FDP seen as a high-cost tool used only to prevent fraud.
“A layered FDP solution naturally helps directly preventing fraud, but it also offers major gains in terms of recovering potentially lost revenue through false positives,” said research author Steffen Sorrell.
“This is something about which retailers remain undereducated, and has allowed fraudsters to capitalise on relatively low FDP spend.”
Juniper also found that the perception of FDP return on investment on the part of retailers is, in turn, hampering global FDP spend growth.
The research firm anticipates that digital payment players will spend US$9.6 billion annually on FDP solutions in 2023, although the bulk of growth over the forecast period is likely to be driven by financial institutions and payment service providers.
This is due to awareness of FDP benefits, as well as a requirement to deal with challenges such as open banking systems and instant payment mechanisms, Juniper observes.
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