E-commerce offers many competitive advantages such as improved productivity, reduced costs, streamlined business processes, improved customer service and global presence. According to a report by emarketer, global ecommerce sales are expected to reach $1.2 Tn by end of 2013. But with the growth in online commerce or e-commerce, the credit card security and online payments fraud remain the biggest issues today.
Cybersource Corp., a unit of Visa reports that lost revenue due to online fraud reached an estimated $3.5 billion in 2012. This study was based on profiling 312 online retail companies based in the United States and Canada. Globally according to a study by Nielson, the loss due to online fraud was estimated at $11.27 billion in 2012.
E-retailers are responding to fraud with tighter transaction review and with a number of fraud monitoring tools. The below fraud monitoring tools are listed, with the percentage of respondents citing them as the most effective according to the report by Cybersource Corp:
For checking customer history:
Purchase device tracing:
Multi-merchant data/purchase history:
A recent survey by Ogone (An Ingenico Company) pointed out some interesting facts regarding online shopping and fraud in 5 European countries: Germany, Belgium, Netherlands, UK and France.
- Some of the important facts of their report are highlighted below:
- European B2C e-commerce market is expected to reach $851 Bn (€625 Bn) by 2016.
- In 2011, $1.225 Bn (€900 Mn)of payment card fraud losses were caused by Card not present online fraud according to a report by Europol.
- 53% of European consumers have made atleast one purchase online since September 2012 according to a report by European Commission.
- Of the 5 countries investigated, Netherlands had highest rates of online purchase with about 74% of consumers purchasing an online item in the last year. This was followed by UK with 71%, Germany (63%), France (58%) and Belgium was the lowest with (44%).
- B2C e-commerce market of UK, Germany and France alone represents a total of $260.065 Bn (€191 Bn). The market which includes online retail goods and services such as events, online travel bookings, downloads and tickets reached $424.274 Bn (€311.6 Bn).
- Smartphone penetration in Europe is expected to reach 90% by 2017 according to e-Marketer.
- 5% - 8% of their sales were generated on mobile devices according to Amazon.
- Security Concern is the 2nd most cited reason for not making a purchase via mobile device. 44% of consumers in UK feel is it not secure enough, followed by 29% in France, Netherlands (24%) and Belgium & Germany (23%).
- Ogone’s research comprised of 253 Interviews on the Phone with e-Commerce businesses in Germany, UK, France, Netherlands and Belgium. Only 14% of e-Commerce businesses in the survey had no specific fraud management systems in place.
- Only 11% of the companies surveyed felt that there was scope for improvement in fraud detection and prevention and that their tools were ‘not fit for purpose’.