Juniper: Card-not-present fraud to skyrocket
Increasingly complex approaches by fraudsters, alongside retailers’ slow adoption of new fraud prevention requirements, will take a toll on companies going forward.
This was according to “Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2018-2023,” a report from Juniper Research that revealed retailers are set to lose approximately $130 billion due to digital card-not-present (CNP) fraud between 2018 and 2023.
As cybercriminals seek to monetize their knowledge to a wider, less tech-savvy audience, complex cross-channel fraud will become the “new normal” — with retailers ill-prepared to fight it. While e-commerce merchants remain, to a large extent, focused on assessing fraud risk at the point of transaction, their analysis in terms of session and behavioral monitoring, or validating the identity of a user to assess fraud risk before any transaction, is lacking.
The industry’s perception of fraud detection and prevention (FDP) is one of issue since many companies consider FDP a high-cost tool used only to prevent fraud, the study revealed.
The good news is digital payment players will spend $9.6 billion annually on FDP solutions in 2023. However, the bulk of growth over the forecast period is likely to be driven by financial institutions and payment service providers. This is due to awareness of FDP benefits, as well as a requirement to deal with challenges such as open banking systems and instant payment mechanisms.
“A layered FDP solution naturally helps directly preventing fraud, but it also offers major gains in terms of recovering potentially lost revenue through false positives,” said Steffen Sorrell, principle analyst, Juniper Research. “This is something about which retailers remain undereducated, and has allowed fraudsters to capitalize on relatively low FDP spend.”
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