Global surge in online fraud drives demand for localised defences

As we stride into the heart of 2024, the landscape of online payment fraud is more daunting than ever. Brace yourself for a staggering forecast: global losses from online payment fraud are poised to reach almost £300 billion by 2028. But here's the kicker: the threat isn't uniform across the globe. Let's dissect the trends by region using the latest research.

The geographical battlefield: understanding fraud across the world

When analysing fraud at a global level, distinct geographical patterns emerge on several levels. For example, according to a recent report from the MRC, 42% of all ecommerce fraud (by value) occurs in the US, with online fraud losses mounting to £36.5billion by 2025. This is despite the population of the US being significantly lower than in APAC, where fraud losses are set to reach £34.4 billion by 2025.

The prevalence of different fraud types varies across regions too. In North America and Europe, refund and policy abuse stand out as the top attack types, reflecting an increasing trend towards ‘friendly fraud’ committed by customers. Conversely, in Asia Pacific the threats are focused on phasing and farming schemes, committed by fraudsters who want to steal or spoof identities to open or takeover customer accounts and place fraudulent orders.

Latin America grapples with the pervasive issue of card testing This method tests whether low-value payments on stolen cards will successfully pass through authorisation with a merchant, before making bigger purchases, or selling those card details on further.

It’s fair to say that the differences we’ve highlighted here are very top level and fraud trends also vary across individual countries, sectors and even transaction value and payment methods. This means there are a huge number of factors merchants need to navigate to optimise their fraud prevention processes.

Despite these variations, one common denominator prevails: false positives – where a genuine customer transaction is wrongly flagged as fraudulent and gets rejected – are the biggest fraud-related issue on merchants’ minds across all regions. From North America to Asia Pacific, Latin America to Europe, the challenge of false positive rates looms large, underscoring the importance of finding the delicate balance between robust fraud prevention strategies and maintaining a smooth customer experience for genuine customers.

Tackling online fraud at an enterprise level

The battle against fraud demands a multifaceted approach. The approach has to account for the dual challenge of controlling fraud and chargebacks, with the delivery of a frictionless customer experience.

According to recent statistics from VERIFI, merchants' are fairly equally split on which half of the problem they focus, with 45% prioritising reducing fraud and chargebacks, while another 45% put the customer experience at the top of the list.

However, navigating these priorities proves daunting for enterprise-sized merchants, who indicated that they often struggle with gaps in fraud tools and capabilities (27%), internal resource constraints (25%), and the daunting task of identifying and responding to new fraud types (26%).

Effectively leveraging data to combat fraud remains a crucial yet elusive goal for many merchants, with 25% citing this as a significant challenge. In this turbulent landscape, merchants must equip themselves with robust fraud prevention strategies and trusted partners who understand how to find the balance between conversion rates and fraud losses.

A big part of this is the ability to have a flexible fraud strategy that can protect data, effectively authenticate customers, seamlessly screen transactions and do all of this without causing friction in the checkout process. For larger and cross border merchants, there is an even bigger challenge to ensure their fraud strategies and tools are geared to cater for the nuances of each market. A blanket approach to fraud prevention will not strike the right balance and they will likely suffer the financial consequences.

BR-DGE's approach to combatting payment fraud

In the ongoing battle against online fraud, robust solutions and constant vigilance are imperative. BR-DGE emerges as a trusted ally in this fight, offering network tokenisation, data insights, and monitoring capabilities to fortify payment security and enhance customer experiences.

We also work with a variety of best-in-class fraud solution providers who are able to meet the varying needs of merchants around the world – to provide the localised and global level defences needed to balance the scales and keep customer payments flowing.