A new study has revealed that retailers will lose around $130 billion in digital CNP (Card-not-Present) fraud between 2018 and 2023.
Juniper Research’s new report, Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2018-2023, explained that complex cross-channel fraud will become the “new normal” in the coming years — and retailers are simply not prepared to fight against it.
The report found that while eCommerce merchants are mostly focused on the point of transaction and session and behavioral monitoring, as well as validating the identity of a user before any transaction, they should take a more pressing role in preventing CNP fraud.
“A layered FDP (Fraud Detection & Prevention) 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 in a press release.
In addition, Juniper is predicting that digital payment companies will spend $9.6 billion annually on FDP solutions in 2023.
Juniper’s data isn’t a surprise. Back in 2017, data revealed that eCommerce merchants, especially in the U.S., were caught up “in a perfect storm” of rapid online sales growth and the transition to EMV chip technology, leaving merchants vulnerable to CNP fraud.
With that in mind, EMV recently announced that it had updated its protocol to prevent this type of fraud. Its EMV 3-D Secure Protocol and Core Functions Specification v2.2.0 includes enhancements to support new authentication procedures for online purchases, which could help stop unauthorized card not present transactions.
“EMV 3DS exists to promote secure, consistent consumer authentication for eCommerce transactions across all channels and connected devices, while optimizing the cardholder’s experience,” Stephanie Ericksen, chair of the EMVCo executive committee, said at the time. “Our work in this area continues to evolve to ensure we respond to new marketplace requirements. EMVCo continues to encourage the payments community to get involved and provide feedback on the EMV 3DS activity.”