While on one hand, the COVID-19 pandemic has accelerated the adoption of e-commerce worldwide, on the other, it has led to the rise of e-commerce related fraud.
According to a new study from Juniper Research, it has been found out that the value of e-commerce fraud-related losses will rise from $17.5 billion in 2020 to $20 billion by 2021, a staggering growth of a whopping 18% within a single year.
The research found out that threat actors, as of late, are targeting consumers as they have increased their online shopping. And this, in turn, is exposing the insecure fraud mitigation processes of merchants who are not very familiar with the overwhelming fraud challenges that exist in the e-commerce space.
The report titled ‘Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2021-2025‘, conducted by Juniper Research, suggests that it’s time merchants step up their game. They must implement better fraud prevention strategies across all eCommerce channels if they do not wish to be subjected to significant chunk of losses.
North America is estimated to be the worst hit as nearly 50% of the $20 billion estimated loss will occur in the region alone in 2021.
Far east & China will be the second most worst hit with eCommerce fraud, followed by West Europe.
Furthermore, the research identified that the use of artificial intelligence or A.I can help enable behavioural biometrics in this area, leading to increased security across all potential fraud channels.
But that being said, increased security can easily lead to increased friction for consumers when it comes to payments.
The new research report found out that while merchants are inclined towards reducing e-com fraud risks from their current levels, they are hesitant to introduce extra friction in the checkout process. Juniper Research found out that one way to address this would be to include clear messaging about security checks to consumers and use automated behavioural analytics, which leverages A.I. to preserve the user experience, aka UX.
Susan Morrow, the co-author of the research, said that merchants would need to make sure the extra layer of security checks are well justified to the user. Only then can they prevent higher cart abandonment rates while making sure they are lowering fraud risks at the same time.
Lastly, the report highlighted that China would be the largest hub of the eCommerce fraud market in the entire world by accounting for a whopping 40% of eCom-related fraud losses in 2025, amounting to $12 billion.
The research suggests that the massive e-commerce market combined with the relative lack of fraud detection measures will be the key drivers behind the situation.
Juniper Research recommends that China-based eCommerce merchants start investing in fraud detection and prevention technologies from now. It will help them escape future fraud-related losses, which can further impact their already slim operating margins.
All in all, it is well understood that consumers should be wary of upcoming fraud-related risks and, to prepare for the same, start becoming more vigilant when it comes to transacting online, especially on lesser-known e-commerce sites. We will keep you updated on all future developments. Until then, stay tuned.