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Despite the best efforts of our industry, payments fraud continues to rise – particularly in the online environment. The most recent research available from online processing firm Vesta suggests that between 11 and 13 percent of all card-not-present (CNP) transactions are fraud attempts. With each successful fraud costing firms between $108 and $155, Vesta estimate a mid-market firm with five million CNP transactions per year could experience 650,000 fraud events costing $16.25 million annually.
Identifying and preventing fraud is an increasingly difficult proposition given the proliferation of new payment methods such as instant payments (currently growing at 30% each year according to Mordor Intelligence), digital wallets (predicted to account for almost half of all electronic transactions by 2026) and Buy-Now-Pay-Later schemes. Further complexity is added by criminal ingenuity, with new fraud methods such as synthetic ID and account takeover emerging as consumers turn to their mobile devices and laptops for their shopping needs, rather than shopping in-person. And this trend continues, with e-marketer/Insider Intelligence telling us online sales grew by 32% this year, almost double their earlier prediction.
