Rising fraud is accompanying e-commerce growth.
According to a new study from Juniper Research, “Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2021-2025,” the value of losses due to e-commerce fraud will increase 18% to over $20 billion by the end of this year from $17.5 billion in 2020.
The research found that fraudsters are targeting consumers as they increase their e-commerce use during the COVID-19 pandemic, exposing many retailers’ insecure online fraud mitigation processes.
Juniper Research also determined that China will become the largest single e-commerce fraud market in the world, accounting for over 40% of e-commerce fraud losses globally in 2025 with more than $12 billion in losses. The study identified China’s massive e-commerce market and a relative lack of fraud detection and prevention platform deployment as the key drivers behind the country’s rapid e-commerce fraud growth.
According to Juniper Research, online retailers operating in China should invest in fraud detection and prevention now, or they will increasingly face damage to their already slim operating margins. Across all markets, the study recommends that retailers utilize artificial intelligence (AI)-based behavioral biometrics to increase security across all potential fraud channels.
While online retailers will be ready to reduce fraud rates from their current levels, Juniper says they will be hesitant to introduce extra friction into the checkout process. The report identifies that clear messaging around security checks and automated behavioral analytics leveraging AI are key capabilities in preventing fraud without disrupting customer experience.
“While the need for security is greater than ever, the competitive e-commerce environment means merchants will need to ensure that extra security checks are justified to the user, or they risk higher cart abandonment rates,” said study co-author Susan Morrow, associate analyst, Juniper Research.