A new study from Juniper Research has found that the value of online fraudulent transactions is expected to reach $25.6 billion by 2020, up from $10.7 billion last year.
This means that by the end of the decade, $4 in every $1,000 of online payments will be fraudulent. The study entitled, “Online Payment Fraud: Key Vertical Strategies & Management 2016- 2020’’ found that the implementation of CHIP and PIN services at POS (Point of Sale) locations in the US is likely to be a key factor driving activity in the online fraud space.
It argued that the greater security afforded by CHIP and PIN would persuade fraudsters to switch their attention from the in-store environment to the CNP (Card Not Present) space. The new study identified three hot areas for online fraud.
These include eRetail (65 per cent of fraud by value in 2020 – $16.6 billion); Banking (27 per cent – $6.9 billion) and Airline ticketing (6 per cent – $1.5 billion). The study also claimed that eRetail would be particularly susceptible to online fraud, with the value of fraud in this sector increasing at twice that of banking and seven times that of airline ticketing.
The research highlighted two key areas for fraud within eRetail:‘buy-online, pay instore’ and electronic gift cards. It argued that the continuing migration to online and mobile shopping, of both digital and physical goods (reaching over $1.7 trillion in 2015) would provide a further incentive for fraudsters to focus their attention on these channels.
Meanwhile, the research claimed that although banks are able to counter online banking fraud by deploying new technologies such as 3DSecure and device fingerprinting, these measures often only provide temporary respite, as fraudsters quickly find new ways to defraud.
Similarly, while extensive efforts by the airline industry to deploy sophisticated Fraud Detection and Prevention (FDP) systems has reduced fraud significantly for some major airlines, this industry has also seen fraudsters shift their focus to other perceived weak spots in the system.
