Triggered by the growing use of digital wallets, the total cost of e-commerce fraud to merchants is likely to exceed $48 billion globally in 2023, from just over $41 billion in 2022, a report showed on Wednesday. This growth will be accelerated by the increasing use of alternative payment methods, such as digital wallets and BNPL (buy-now-pay-later), which are creating new fraud risks.
In India, the Unified Payments Interface (UPI) reported another record high in August, with 6.57 billion transactions, amounting to Rs 10.72 trillion. In FY23 (till August) UPI recorded over 30 billion transactions worth Rs 51.74 trillion. Online payment fraud includes losses across the sales of digital goods, physical goods, money transfer transactions and banking, as well as purchases like airline ticketing.
Fraudster attacks can include phishing, business email compromises and socially engineered fraud. "To combat this fraud, e-commerce merchants must implement simple steps such as address verification, combined with risk-based scoring on transactions, which will allow merchants to best mitigate the massive fraud threats present," suggested research author Nick Maynard.
The report recommended that fraud prevention vendors focus on building platforms providing AI-powered risk-based scoring, which can be payment method agnostic, to best suit changing market conditions. Additionally, the research found that the potential of fraud with BNPL is a major risk going forward. Given the delayed nature of BNPL payments, fraudsters can make several illegitimate payments using stolen card details before the fraudulent activity is identified, creating significant risk.
Meanwhile, India is on track to become one of the world’s leading economies with an e-business sector worth approximately $100 billion by 2024. This has been in part driven by the country’s prolific use of technology. According to data from the Indian Council of Global Relations, India has over 1.15 billion phones and over 700 million internet users.
(With inputs from IANS)