The value of losses due to eCommerce fraud will rise this year, from $US17.5 billion in 2020 to over $US20 billion by 2021; a growth of 18 per cent over a single year.

The figures are contained in a new paper by Juniper Research.

The research found that fraudsters have targeted consumers as they have increased their eCommerce use; exposing insecure fraud mitigation processes from merchants who are unfamiliar and unprepared for the continuing fraud challenges in this market.

According to the authors,  merchants need to do more to implement fraud prevention strategies across all of their eCommerce channels, or they will continue to experience large losses.

“The use of AI will enable behavioural biometrics in this area, which will increase security across all potential fraud channels.”

Research co-author Susan Morrow explains: “While the need for security is greater than ever, the competitive eCommerce environment means merchants will need to ensure that extra security checks are justified to the user, or they risk higher cart abandonment rates.”

However they caution that increased security must not involve increased friction.

The report, Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2021-2025, found that while merchants will be keen to reduce fraud rates from their current levels, they will be hesitant to introduce extra friction into the checkout process.

The report identified that clear messaging around security checks and automated behavioural analytics leveraging AI are key capabilities in preserving the user experience.

China the biggest eCommerce Fraud Market

The research also found that China will be the largest single eCommerce fraud market in the world, accounting for over 40 per cent of eCommerce fraud losses globally in 2025 at over $US12 billion.

The research identified a massive eCommerce market and a relative lack of fraud detection and prevention platform deployment as the key drivers behind this. The authors recommend that merchants operating in China should invest in fraud detection and prevention now, or they will increasingly face damage to their already slim operating margins.

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