By the end of the decade, $4 in every $1,000 of online payments will be fraudulent.
A new study from Juniper Research has found that the value of online fraudulent transactions is expected to reach $25.6 billion by 2020, up from $10.7 billion last year. In other words, by the end of the decade, $4 in every $1,000 of online payments will be fraudulent.
The implementation of CHIP and PIN services at Point of Sale (POS) locations in the US is anticipated to be a crucial factor driving activity into the online fraud space, as security is heightened in card-present transactions, according to the study, ‘Online Payment Fraud: Key Vertical Strategies & Management 2016-2020’. The greater security afforded by CHIP and PIN will likely press criminals to shift their attention from the in-store environment to the CNP (Card Not Present) space.
The new study also found that eRetail tops the list of online fraud targets, with 65 percent of fraud by value in 2020, or $16.6 billion. Banking (27 percent, or $6.9 billion) and Airline ticketing (6 percent, or $1.5 billion) round out the top three targets.
Additionally, eRetail is particularly susceptible to online fraud, particularly in two key areas – buy-online, pay in-store and electronic gift cards -- with the value of fraud in this sector increasing at twice that of banking and seven times that of airline ticketing.
The continued migration to online and mobile shopping for both digital and physical goods will provide further incentive to cyber criminals to focus their attention on these channels as their value reached over $1.7 trillion in 2015.
The study also underscored that the current countermeasures, such as 3D secure and device fingerprinting or other biometric options only provide temporary respite as fraudsters adapt to new methods of defrauding customers. And when thwarted with original targets, the fraudsters will simply shift efforts to other perceived vulnerabilities in the system.
The whitepaper, ’Managing the Risk of Fraud’, is available to download from the Juniper website together with further details of the full research and the attendant Interactive Forecast Excel (IFxl).
