A new study from Juniper Research has found that the total cost of eCommerce fraud to merchants will exceed $48 billion globally in 2023, from just over $41 billion in 2022.
It predicted that this growth will be accelerated by the increasing use of alternative payment methods, such as digital wallets and BNPL (Buy-Now-Pay-Later), which are creating new fraud risks.
The report recommended that fraud prevention vendors focus on building platforms providing AI-powered risk-based scoring, which can be payment method agnostic, to best suit changing market conditions.
Online payment fraud includes losses across the sales of digital goods, physical goods, money transfer transactions and banking, as well as purchases like airline ticketing. Fraudster attacks can include phishing, business email compromises and socially engineered fraud.
North America Tops Fraud League
The research identified North America as having the largest fraudulent transaction value of any regional market, accounting for over 42% of global fraud by value in 2023, despite representing less than 7% of banked individuals globally.
The research cited the vast volume of data breaches and the broad availability of stolen credit card information as the key risk factors in the North American market.
Meanwhile, Africa and the Middle East are expected to account for the lowest fraudulent transaction losses – 3% (US$1.44 billion), same as Central and Eastern Europe.
Research author Nick Maynard explained: “To combat this fraud, eCommerce merchants must implement simple steps such as address verification, combined with risk-based scoring on transactions, which will allow merchants to best mitigate the massive fraud threats present.”
BNPL Fraud – A Major Risk
Additionally, the research found that the potential of fraud with BNPL is a major risk going forward. Given the delayed nature of BNPL payments, fraudsters can make several illegitimate payments using stolen card details before the fraudulent activity is identified, creating significant risk.
In turn, the research recommended that BNPL vendors conduct robust identity verification at the point of onboarding to mitigate these risks.