Alternative Finances

Fraud Costs and Digital Currency Acceptance On The Rise Concurrently


Payment-card fraud keeps rising — and the costs are rising even faster according to the recently released 2014 LexisNexis True Cost of Fraud study, eCommerceBytes reported.

The LexisNexis study found that retailers lost 0.68 percent of their revenue to fraud in 2014, up from 0.51 percent in 2013. In addition, for each $100 of fraud, the expense to merchants was $308, up from $279 cost for each $100 of fraud in 2013. Overall there was a 10 percent rise in revenue lost to fraudsters year over year.

Fraud costs were even higher for mobile commerce, where every $100 in fraud cost m-commerce merchants $334. Mobile has overtaken ecommerce through desktop computers as the primary form of online buying by consumers.

The study also reported that virtual currency acceptance is growing rapidly among international merchants: 11 percent now accept it, compared to only 1 percent of domestic-only merchants.

“This type of payment promises to play a nuanced role in fraud prevention,” the study said. “On the one hand, 27 percent of international merchants accepting virtual currency report that fraud using this payment method has increased over the past 12 months (only 12 percent have seen a decrease). On the other hand, fraud using certain types of virtual currency may be less damaging to merchants.”


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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