Online Fraud Rates Expected To Skyrocket This Holiday SeasonMiCamp Solutions
The increasing number of retailers utilizing EMV-compliant payment processes has made it more difficult for individuals looking to commit fraud in card-present environments. As a result, many are switching their focus to online targets. Research from ACI Worldwide indicates that financial institutions are expecting card-not-present (CNP) fraud rates to increase by 43% in volume, while retailers are expecting CNP fraud rates to increase by 31%.
Holiday Season Shopping Trends And Fraud
Every year, the holiday shopping season (typically defined as the period between Thanksgiving and Christmas) brings a surge of sales to merchants, along with an unwelcome increase in fraudulent transactions. We expect fraud rates to surge around Black Friday, Cyber Monday, and Christmas Eve, due to historically high processing volumes on these days.
Other key findings from ACI Worldwide’s latest research:
- CNP global online fraud rates are expected to rise by 12% in volume and sales are expected to rise by 13% during the 2016 holiday period.
- Exposure to new purchasing trends will lead more customers to embrace alternative shopping methods like buying directly online or choosing in-store pick up instead of delivery.
- There will be an 8% decrease in average ticket value for attempted fraud, from $239 to $219 per individual sale by credit card.
- Criminals are primarily focusing on specific consumer goods like cosmetics, footwear, and low-priced electronics that are easy to sell on auction sites and on the black market.
Online Fraud Rates Matching Global Retail Growth
Mike Braatz, chief product officer at ACI Worldwide, noted that, “Fraud is increasing at a rate nearly equal to general retail growth globally, and is exponentially increasing in the U.S. due to a seismic shift from in-store to online activity.”
It’s crucial that merchants are well prepared for this holiday season. This is especially relevant for merchants operating in retail industries where customers shop more heavily during the holiday season.
What Can Merchants Do To Prevent Holiday Season Fraud?
For both card-present and CNP transactions, merchants should utilize encryption and tokenization technologies. When these payment security technologies are employed together correctly, sensitive payment card data isn’t stored, processed, or transmitted by the merchant – meaning that the merchant’s brand is protected from the damaging effects of a data breach.
Also, incorporating 3D Secure authentication with programs like Verified by Visa can help reduce the number of fraudulent transactions a merchant may see. And utilizing advanced online security measures, like the measures employed by PaymentLock, can also benefit a merchant’s bottom-line and make the holiday season much more profitable.
There are other steps you can take as well, which you can read about in our blog article Best Practices For Reducing Fraud And Catching Common Scams This Holiday Season. Get in touch with us today if you’d like to find out more about preventing fraud.