The 2 Reasons Digital Card-Not-Present Fraud Continues To Rise

HAMPSHIRE, U.K.— A new study has found retailers are set to lose some $130 billion in digital card-not-present (CNP) fraud between 2018 and 2023.

CNP Fraud

The report from Juniper Research highlights two reasons for the increases in fraud: increasingly complex approaches being deployed by fraudsters, in addition to retailers’ inertia in adapting to new fraud prevention requirements.

Juniper’s new research, Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2018-2023, posits that as cybercriminals seek to monetize their knowledge to a wider, less tech-savvy audience, complex cross‑channel fraud will become the “new normal,” with retailers ill-prepared to fight it.
The report found eCommerce merchants remain, to a large extent, focused on assessing fraud risk at the point of transaction. As such, analysis in terms of session and behavioral monitoring, or validating the identity of a user to assess fraud risk before any transaction, is lacking, the report states. Juniper cited industry perception of fraud detection  prevention (FDP) as one of the reasons behind the trend, with FDP seen as a high-cost tool used only to prevent fraud.

Layered Solution
“A layered FDP solution naturally helps directly preventing fraud, but it also offers major gains in terms of recovering potentially lost revenue through false positives. This is something about which retailers remain undereducated, and has allowed fraudsters to capitalize on relatively low FDP spend,” explained research author Steffen Sorrell.

Juniper found the perception of FDP return on investment on the part of retailers is, in turn, hampering global FDP spend growth. Juniper anticipates digital payment players will spend $9.6 billion annually on FDP solutions in 2023, although the bulk of growth over the forecast period is likely to be driven by financial institutions and payment service providers. This is due to awareness of FDP benefits, as well as a requirement to deal with challenges such as open banking systems and instant payment mechanisms, Juniper Research said.

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Word Count: 392
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Copyright Year: 2019
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