As digital commerce continues to evolve and fraud attacks grow more adaptive, the MRC’s Global eCommerce Payments & Fraud Report delivers vital insights for merchants, industry professionals, and policymakers alike. The comprehensive report highlights the latest trends that global ecommerce merchants are experiencing in the payments and fraud prevention landscape.
This year revealed some unexpected trends – based on insights from 1,082 merchant respondents across 35 countries worldwide.
Last year, refund and policy abuse was the most concerning fraud threat. This year, 57% of merchants cited an increase in refund and policy abuse, so it is still a top concern. Also, debuting on the survey is a new attack we opted to monitor – real-time payment (RTP) fraud. This category came in first for the North American region and ranked second for Europe and Asia.
Since COVID-19, in response to consumer buying patterns, many merchants adopted new payment methods faster than in prior years, so it makes sense that we are seeing an associated rise in fraud trailing the implementation of newer payment methods. Real-time payment fraud consists of attack methods like exploiting one-time use passwords or codes, account takeovers, and artificial intelligence (AI) assisted synthetic identity. We are going to see more of this in the coming year.
At first, I was surprised to see that first-party misuse, except for a couple of segments, showed an overall decline in the report, However, we are seeing signs of progress. After a rocky start, more merchants are now leveraging SCA (40%) in various regions, with some reporting improvements in authorisation rates or the use of exemptions. There is still a lot of stabilisation in this area, and we are noticing other global regions (Japan, Australia, and Brazil) beginning to implement an SCA standard.
More merchants are also using compelling evidence solutions to submit data points to improve their dispute win rate. I would also suggest that an impact on financial performance management (FPM) could be felt as more fraud is being conducted through return abuse and real-time payment fraud. As a result, it may never hit an FPM/dispute cycle. I am definitely looking forward to next year’s report results already.
Refund and policy abuse needs to continue to be a top priority due not only to the incidence growth over the last year, but also to what we are seeing in world economics. If it wasn’t a priority last year, it should probably make the top of the list this year. I think it is also a good time to be reviewing processes and systems for gaps in real-time payment fraud, working cross departmentally with teams and outside vendors. It would be a good time to review KPIs and velocity checks on key systems (passwords, payment attempts, account creation, etc.).
From an FPM perspective, explore the vendor solutions on the market to see what can be handled automatically to shift resource time onto the other two forms of fraud, but keep monitoring.
Merchants report an upcoming shift of investment into tools and technologies over staff, so now would be a good time to shift payroll hours and explore improvements in AI/machine learning (ML) and vendor solutions. For instance, when we look at the number of orders digitally screened (52%) vs orders manually screened (23%), there is an opportunity to improve the ML models to drive some processing to digital screening. Depending on your business vertical, manual order screening is still yielding results, with 19% of manually screened orders being subsequently declined.
Globally, 37% reported currently accepting RTP, with a large group (42%) stating they are likely to implement it this year. In the merchant group that currently accepts RTP, approximately 80% saw a marked use by their customers over the past year and expect it will be higher still next year. These statistics reflect consumer buying behaviours and signal where fraudsters will shift their focus next. In regions where real-time payments have been more commonplace, we are starting to see an increase in fraud – like the use of phony QR codes that route payments to an incorrect entity. Getting ahead of fraud attacks and educating consumers will be vital in protecting this payment method and revenue.
The number of merchants adding new payment methods dropped (74% this year as opposed to 82% last year). After focusing heavily on reducing fraud and chargebacks and improving the customer experience for the last several years, we see resources shifting into minimising fraud-related operational costs to help maximise revenue.
This year, MRC Barcelona will feature our own Una Dillon, VP of Advocacy & Education, who will lead a discussion with Uber and our two survey partners, Visa Acceptance Solutions and Verifi. They will discuss the results from a global level but may touch on a couple of unique things in the European region.
With the macroeconomic shifts happening throughout the world, one keynote session, delivered by Max Lambertson, a Mastercard Senior Economist, will share trends on the European consumer base by explaining how business and consumers are currently behaving.
Another keynote will feature Julie Conroy, Chief Insights Officer with Datos Insights, who will explore what is happening with the rise of non-card payments and how this is shifting fraud threats.
This year’s agenda covers a variety of both payment and fraud topics that always make it hard for me to choose which sessions to go to. We will also have the usual conversations happening about orchestration, cross-border, Pay by Bank, and PSD3, as well as fraud sessions on returns and policy abuse, verified account trafficking, disputes, and the latest AI uses in fraud. We also have an acquirer panel and an issuer panel, so we bring focus onto challenges in the whole ecosystem as well as merchant roundtables to fuel networking connections and real-world discussions about the complexities attendees are having right now.
Immediately on the horizon is our European flagship conference, MRC Barcelona followed by MRC Melbourne. Throughout the summer, we will continue our weekly webinar series but also add a new summer series that dives deeper into the trends from this year’s survey report. For teams with limited travel budgets, we have three more virtual summits coming this year – with the next one all about BINs.
This past summer, through a partnership with Checkout.com, MRC made its payment essentials and fraud essential courses complimentary for companies with a membership, where we have had close to 4,000 people enrol already. We recently offered a prep course for the first time to assist payment and fraud professionals on their journey to get CPFPP certified, and plan to offer another in-person course this summer. Our advocacy initiatives continue to educate regulators globally on trends, and I encourage everyone to review our impactful work here to understand the work we strive to do on behalf of the collective merchant base and the ecosystem as a whole.
Tracy Kobeda Brown is the VP of Programmes and Technology for the MRC. She was head of product for Fragomen, Lockerz, and the CEO of Evil Genius Designs. As a merchant, Tracy launched American Eagle Outfitters’ ecommerce site, ae.com. She speaks globally at corporate events and conferences on the topic of fraud prevention and payments. She earned her master’s degree from Carnegie Mellon and her bachelor’s degree in economics from The Wharton School.
The Merchant Risk Council (MRC) is the premier global non-profit membership association for payments and fraud prevention professionals, established in 2000. MRC empowers its members to stay connected, current, and influential within the industry by emphasising collaboration, networking, education, and advocacy. Acting as a central hub for ecommerce fraud and payments professionals, solution providers, and brands of all sizes, MRC drives industry innovation and education. With operations in the US, Europe, APAC, and expanding into LATAM, MRC is continuously growing its global presence.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now