The e-commerce merchants are required to technologically do more to put into practice certain fraud prevention strategies across their e-commerce channels.
Given the current market scenario, the value of losses due to increasing e-commerce fraud will rise this year. The value will rise from $17.5 billion in 2020 to more than $20 billion by 2021. This indicates a growth of almost 18% over a single year, a recent research study from Juniper Research reveals.
The researchers found that online fraudsters have been targeting consumers as they have increased their online shopping. This has exposed several insecure fraud mitigation processes from retailers who are unfamiliar as well as unprepared for the rolling challenges in this market.
The study showed that the merchants are required to do more (technologically) to put into practice certain fraud prevention strategies – spanning all of their e-commerce channels. Otherwise, businesses will continue to experience huge business losses and data theft.
The industry experts believe the use of artificial intelligence can enable behavioral biometrics in this aspect. It will increase the security spanning all potential fraud channels. The study found that even if merchants are keen to reduce fraud rates from their existing levels, they will be reluctant to introduce new friction in the checkout process.
It was also observed that a clear messaging around security checks as well as automated behavioural analytics that leverage AI, is the key capabilities for preserving the evolving user experience.
In this context, Susan Morrow, research co-author explains – “While the need for security is greater than ever, the competitive e-commerce environment means merchants will need to ensure that extra security checks are justified to the user, or they risk higher cart abandonment rates.”
In this scenario, China will be the largest single e-commerce fraud market in the world. It will account for more than 40% of the e-commerce fraud losses in 2025 worldwide, at over $12 billion. The massive e-commerce market and a relative lack of scam detection as well as prevention platform adoption are the key drivers behind this.
The researchers of this study suggest that online businesses operating in China should increasingly invest in fraud detection and prevention now. If not, they will gradually face more damage to their current business operating margins.