Online Payment Fraud Losses to Exceed $343 Billion over the Next 5 Years
The cumulative merchant losses to online payment fraud globally between 2023 and 2027 will exceed $343 billion, according to a new study from Juniper Research. As a comparison, this equates to over 350% of Apple’s reported net income in the 2021 fiscal year; showing the massive extent of these losses.
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. This is despite the wide employment of identity verification measures. The research 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, but 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,” explained report author Nick Maynard.
The research identified physical goods purchases as the largest single source of losses; accounting for 49% of cumulative online payment fraud losses globally over the next 5 years, growing by 110%. Lax address verification processes in developing markets are a major fraud risk, with fraudsters targeting physical goods specifically, due to their resell potential. As such, it 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.