47% of Merchants Report False Declines Cost Them Sales

Fraud prevention is no longer about stopping a single bad transaction. It is about managing risk across an entire payment journey without driving away legitimate customers.

That is the central theme of the December edition of the Payments Orchestration Tracker series, “Orchestrating Trust: The Future of Fraud Prevention in Payments.” The report argues that as digital commerce grows more complex, fraud has become more coordinated and adaptive.

Static rules engines and stand-alone machine learning tools are no longer sufficient. Instead, merchants and financial institutions are turning to fraud orchestration, described as a command-and-control layer that connects multiple risk tools, identity systems and payment gateways into a single decisioning framework. The goal is not only to reduce fraud losses, but also to protect revenue by minimizing false declines and checkout friction.

The report highlights several data points that underscore the shift:

85% of merchants say their top fraud challenge is preventing fraud without degrading the customer experience.

53% of U.S. financial institutions already use fraud orchestration, with another 16% implementing it and 26% planning adoption.

51% of global eCommerce merchants expect fraud-management staffing costs to remain flat or decline, even as 63% plan to increase investment in fraud technology.

Those figures reveal a broader structural change. Fraud management is moving from labor-intensive review processes toward automated, real-time systems that can evaluate identity, device data, transaction history and behavioral signals in milliseconds.

The report goes further than defining orchestration. It frames it as a response to a deeper tension in payments. Merchants operate in a world where authorization rates, checkout speed and conversion metrics matter as much as loss prevention. Nearly half of merchants estimate that up to 5% of legitimate orders are incorrectly declined as fraudulent, representing an estimated $50 billion in lost revenue industrywide. Fraud systems that are too blunt create their own financial risk.

Orchestration aims to resolve that tension by sequencing tools intelligently. Instead of running every transaction through every check, platforms determine when heightened scrutiny is warranted and when it is not. Trusted customers move through streamlined flows. Suspicious patterns trigger layered defenses such as behavioral biometrics, device fingerprinting or additional authentication.

Another significant insight is the connection between fraud strategy and payment routing. The report stresses that fraud controls and payment optimization are intertwined. Gaps in fraud systems can increase false declines. Poor routing decisions can increase exposure. By integrating fraud orchestration into open payments platforms, merchants can coordinate risk checks and authorization strategies in tandem.

The document also emphasizes operational efficiency. Many merchants manage five or more payment integrations, along with multiple fraud vendors. Fragmentation creates blind spots and raises costs. Central orchestration reduces the burden of managing disparate systems, allows A/B testing of fraud tools and enables faster iteration as fraud patterns shift.

Importantly, fraud orchestration does not end at the authorization moment. The report outlines a life-cycle approach that spans onboarding, account changes, transaction monitoring and post-purchase disputes. Fraudsters exploit gaps between channels and stages. A unified system provides cross-channel visibility and centralized case management.

The underlying message is that fraud has become too dynamic for siloed defenses. As instant payments, embedded commerce and digital wallets compress decision windows, organizations need adaptive systems that can learn and adjust in real time. Fraud orchestration is positioned not as a new tool, but as an architectural layer that brings coherence to an increasingly complex ecosystem.

For payments leaders, the implication is clear. Trust is no longer maintained through isolated controls. It is sustained through coordinated intelligence that protects revenue while preserving the customer experience.