Juniper: Retailers brace for $71 billion card-not-present fraud loss

With fraudulent card-not-present (CNP) transactions on the rise, losses will become staggering over the next five years.



Retailers stand to lose $71 billion globally by 2022, driven by a number of factors, such as the United States' shift to Europay, MasterCard and Visa (EMV) chip cards, delays in 3DS 2.0 (3D-Secure) and click-and-collect fraud. This was according to “Online Payment Fraud: Emerging Threats, Key Vertical Strategies & Market Forecasts 2017-2022,” a report from Juniper Research.



By 2022, fraudulent CNP physical goods sales will reach $14.8 billion annually. Click-and-collect services are particularly vulnerable, given the lack of a mandatory residential delivery address. Yet, retailers remain reluctant to impose rigorous identity checks on order pick-up for fear of damaging the consumer experience and reducing conversion rates.



Meanwhile, many merchants perceive combatting fraud as too expensive. Consequently, they have been ill-prepared to deal with the shift to online fraud following the introduction of EMV (chip and signature) payment cards in the U.S. In most instances however, merchants would receive value from their investment.



For those companies that are taking steps to fight back, three key battle-grounds are emerging in the fight against fraud. By 2018, machine learn-ing will emerge as a key tool in identifying genuine users. The increased shift to mobile e-commerce will also increasingly rely on 3DS 2.0, a mes-saging protocol to enable consumers to authenticate themselves with their card issuer when making CNP e-commerce purchases. Biometrics usage will also accelerate, the study revealed.



"2018 will herald the arrival of new tools in the fight against fraud", said Steffen Sorrell, senior analyst, Juniper Research. "3DS 2.0 will finally begin to rollout and will mark a paradigm shift in terms of merchants and issuers leveraging shared data. We also expect passive biometrics, such as the manner in which a device is handled, to become key in the future."