Retailers to lose over $25 billion through online payment fraud by 2024

Online payment fraud will cost eCommerce merchants in excess of $25 billion by 2024, a study by Juniper Research has found. This figure represents a 52% growth in just 4 years, a substantial jump from an estimated $17 billion of losses in 2020.

The research, entitled 'Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2020-2024', shows that eCommerce payments are being increasingly targeted by fraudsters due to the growing popularity of online shopping and the introduction of EMV.

In order to prevent increasing levels of sophisticated fraud taking place, the authors emphasised that online retailers across the world must use a similar approach to Secure Customer Authentication (SCA), a system currently being implemented in Europe. Juniper also stated that payment gateways are vital to ensuring that security measures, such as two-factor authentication, are adopted at scale.

In addition to these practices, the report argues that eCommerce merchants should be taking steps to educate their customers about online fraud; this includes informing them of cybersecurity practices, common fraud methods and changes to the checkout process that are taking place to help prevent fraud.

Research co-author Nick Maynard said: “The explosion of eCommerce means that fraudsters have evolved their tactics, and so merchants must also evolve. eCommerce merchants must educate their users in anti-fraud best practice, as the human element is consistently the most vulnerable to exploitation in the online payments ecosystem.”

Juniper also warned that when implementing anti-fraud measures, online retailers must be careful to ensure that any increased friction in the checkout experience is minimised or else face increased rates of cart abandonment. It recommends that retailers work closely with security vendors to combine a low friction customer experience with more stringent authentication requirements in their systems.