Is fraud prevention top of mind for merchants? Customers expect it to be.
The rapid surge in online shopping and digital payments over the past few years has been a boon for merchants and vital convenience for consumers. Unfortunately, it’s also been an opportunity for fraudsters.
With the sheer volume of online transactions soaring, merchants have done their best to keep up. From upgrading digital payment systems to fulfilling online orders, fighting fraud has been an unwelcome additional burden faced by retailers and companies. But with card-not-present and other digital transactions on the rise, the battle against fraud cannot be ignored. In fact, 68% of merchants have seen an increase in fraud since COVID-19 began.1
“The sophistication of the attack surface shows no sign of abating,” a report from Aite-Novarica concluded.2 With fraud so widespread, the report urges merchants not to be complacent: “As such, many firms are seeking to reevaluate and enhance their control frameworks.”
Thankfully, international payment networks and financial institutions have been working hard to protect merchants with new approaches and technologies for risk mitigation and fraud protection. By partnering with acquirers and merchants, payment networks like Discover® Global Network can enable best-in-class solutions using the latest industry standards while optimizing the customer experience. Now is the time to take advantage of these important safeguards.
The fight against fraud is here
It’s a simple fact: More digital transactions mean greater potential instances of fraud. With more consumers moving into online channels due to COVID-19, many aren’t used to taking the necessary cybersecurity precautions to protect themselves. Globally, merchant losses to online payment fraud are expected to total $343 billion between 2023 and 2027.3
Consumers have placed their trust in merchants to keep abreast of the fraud landscape and take the necessary steps to keep their data safe. Not surprisingly, in a recent survey, 88% believe that fraud protection was very important.4
Fraud protection is a cornerstone of modern retailing
When done right—and communicated effectively—fighting fraud can be a competitive advantage
for merchants and both a differentiator and a revenue generator.
“Firms on the leading edge [of fraud prevention] will have a greater ability to acquire new customers, enable robust digital transactional functionality and efficiently manage risk in a compliant manner,” Aite-Novarica found. “Conversely, those that lag in their investments will see their ability to acquire and keep consumers wane in this increasingly digital age.”5
Today’s tools for merchants include new strategies that can distinguish between trustworthy customers and fraudsters, allowing consumers to conduct transactions easily and quickly while stopping potential fraud in its tracks. Indeed, 57% of consumers say they are likely to abandon an online platform if they feel that their personal information is not being properly protected.6 Fortifying those systems has the opposite effect by increasing consumer confidence.
Secure in-store transactions are similarly important to customers. In a recent study of debit card users, for example, PIN-based verification for card-present transactions was overwhelmingly the preferred method of authentication by consumers. A full 73% of those surveyed in the U.S. said they preferred using PINs for security because of the added security step these payment methods require, while only 9% would opt for no verification at all.7
Fraud is here to stay—but so are ways to mitigate risk
With the recent surge in ecommerce, cyber fraud will only grow. Thankfully, merchants have a powerful set of tools that give them the ability to protect themselves and their customers while also boosting sales.
“Many fraud executives are collaborating with their business counterparts to help fund solutions that will enhance their security posture while also reducing undue friction for the customer experience,” Aite-Novarica found.10
Indeed, with the new tools available for merchant transactions, significant protections and tools can lower the risk of fraud while working to keep consumer payments both easy and convenient. Merchants that deftly walk this line can stand out and succeed in an increasingly difficult climate.
EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC.
1 451 Research, part of S&P Global Market Intelligence, March 2022. “Optimizing Payments to Level Up the Customer Experience.” Commissioned by Discover Global Network.
2 Aite-Novarica Group, November 2021. “Fraud in Commercial Banking: Keeping Pace with Attacks and Evolving Expectations.”
3 Juniper Research, July 2022, “Online Payment Fraud: Market Forecasts, Emerging Threats & Segment Analysis 2022-2027.”
4 Q3 2021 Aite-Novarica Group survey of 2,046 U.S. users of prepaid cards or buy now, pay later options.
5 Aite-Novarica Group, November 2021. “Fraud in Commercial Banking: Keeping Pace with Attacks and Evolving Expectations.”
6 PYMNTS.com, November 2021. “Report: Merchants Fight Data Breaches, Payments Fraud with Employee Education, Cybersecurity Insurance.”
7 Mercator Advisory Group, February 2022, “Consumer Debit Industry Trends, Behaviors and Preferences.”
8 451 Research, January 2022. “Global Merchant & Consumer Payments Survey.” Survey fielded in Q4 2021
9 451 Research, part of S&P Global Market Intelligence, March 2022. “Optimizing Payments to Level Up the Customer Experience.” Commissioned by Discover Global Network.
10 Aite-Novarica Group, November 2021. “Fraud in Commercial Banking: Keeping Pace with Attacks and Evolving Expectations.”
The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.