eCommerce Losses to Online Payment Fraud Will Exceed $25 Billion in 2024
A new study from Juniper Research found that eCommerce merchant losses to online payment fraud will exceed $25 billion in 2024, from just of $17 billion in 2020. The losses will rise despite the ongoing implementation of SCA (Secure Customer Authentication) in Europe.
The popularity of eCommerce and increased card-present security with the introduction of EMV, have made payments a compelling target for fraudsters. The research highlighted that eCommerce merchants outside Europe must adopt similar measures to SCA, including two-factor authentication, or they will suffer from increasing levels of sophisticated fraud. Payment gateways will be vital to ensure that these security requirements are implemented at scale.
As well as implementing further payment security measures, eCommerce merchants must take on a more educational role for their users. This role will primarily be education about cybersecurity practices, common fraud methods and changes to the checkout process to improve fraud mitigation. This will be essential in China, which will account for 42% of all eCommerce payment fraud in 2024.
“The explosion of eCommerce means that fraudsters have evolved their tactics, and so merchants must also evolve. eCommerce merchants must educate their users in anti-fraud best practice, as the human element is consistently the most vulnerable to exploitation in the online payments ecosystem,” said research co-author Nick Maynard.
The research also identified that while additional security measures, including two-factor authentication, must become more widespread, merchants must be careful when implementing these changes. Increased friction in the checkout experience must be minimised, or merchants will face increased cart abandonment rates. Juniper Research recommends that security vendors work with merchants to build security measures into shopping apps that ensure a low-friction user journey, whilst encompassing increased authentication requirements.