E-Commerce Losses From Online Payment Fraud Are Doubled
In welcoming the beginning of 2019, e-commerce needs to prepare a new strategy to protect the reputation of the platform and consumers from fraud. Juniper Research estimated that the annual losses suffered by e-commerce due to payment fraud are estimated at 48 billion dollars by 2023 which doubled from 22 billion dollars projected in 2018.
What is payment fraud? It is any type of illegal or false transactions carried out by cybercriminals. The fraudsters deprive money, personal property, or sensitive information through the Internet. There are three general characteristics of payment fraud:
- Fraudulent or unauthorized transactions; the fraudsters steal personal credit card consumer data and use it to make an illegal transaction.
- Merchandise is lost or stolen
- False refund request; the fraudsters pretend that the goods don’t arrive and ask for a refund.
Still according to the result, one of the factors driving the increase of the payment fraud is a change in consumer behaviour which shifts to transactions via mobile devices (m-commerce).
According to a result of research published by Statista, the number of smartphone users is expected to increase from 2.1 billion in 2016 to around 2.5 billion in 2019, with an increase in smartphone penetration rates as well. More than 36 percent of the world’s population is projected to use smartphones in 2018, up from around 10 percent in 2011.
According to 451 Research, a leading company in IT research, the number of m-commerce transactions will take over e-commerce transactions globally in 2019. China will become the market leader in m-commerce with the value of mobile device transactions exceeding 1 trillion US dollars.
While a variety of instant payment mechanisms and P2P mobile money transfer services do offer convenience and practicality to consumers, the fraudsters spot the vulnerability that can be exploited from the relatively evolving mechanism of mobile transactions.
Assessing the losses estimation due to the fraud, it is certain that e-commerce can no longer use the old method in mitigating the risk. They need to evaluate fraud prevention strategies and keep their eyes to the constantly changing trends. Juniper Research recommends a prevention approach that can be applied omnichannel and protects not only consumers but also merchants and partners involved while maintaining the minimum friction during the transaction – as the possibility of consumers leaving the shopping cart for the authentication process is troublesome.