The MRC publishes a comprehensive annual report on ecommerce payments and fraud trends. Looking at the 2023 edition, what are some trends that have had the most substantial impact on the industry?
We partner with Cybersource and Verifi to conduct the Global Ecommerce Payments and Fraud Survey. This report has turned out to be a valuable tool for understanding how ecommerce merchants are managing payments and fraud. I think one of the most interesting highlights for 2023 is that, of 1,072 respondents, almost all reported improved fraud management KPIs over their 2022 numbers. This is likely a reflection of the 2021–2022 shift, where we saw merchants move from a response role to proactively protecting revenue by being more progressive in customer experience over fraud prevention in the face of COVID-19 and by implementing more fraud prevention methods.
From a fraud attack perspective, we see phishing being reported as a top attack, followed by first-party misuse (friendly fraud), card testing, and identity theft taking top places depending on the region.
With payments, roughly 9 in 10 merchants are encouraging preferred payments. This will be interesting to watch across regions with the growth in digital payments. We’re seeing merchants leverage more payment processor relationships and multiple acquiring banks to support initiatives and optimise revenue.
What trends did you encounter regarding first-party misuse in 2023?
With economic pressures and inflation, first-party misuse has continued to rise. Over 62% of our respondents reported an increase in friendly fraud, with even higher numbers in APAC. While merchants continue to implement new methods and solutions to combat fraud, the number one approach is revoking access to services/purchases for customers who file chargebacks.
This is such a tricky line for merchants because the goal of a great fraud prevention team is to maximise revenue while mitigating fraud. This past year, merchants have been making cancellation and return policies clearer, increasing monitoring for anomalies, and blacklisting customers. This signals the continued frustration of trying to distinguish good transactions from bad ones while assessing the long-term value of a customer relationship.
With that, merchants are generally optimistic about Visa’s newly launched programme, Compelling Evidence 3.0 (CE3.0), that allows merchants to submit additional information about disputes as a new way to fight illegitimate chargebacks, levering data from previous transactions. It will be interesting to watch the impact of CE3.0 on first-party misuse and how Visa will tune their data models for improved decisions as well as the similar programmes other card networks have in the works.
What should merchants and ecommerce professionals know about payment optimisation in 2023?
Payment optimisation has cemented its place within payment and fraud teams as a valuable way to protect and improve revenue for an organisation. Using rich data, payment orchestration, and new fraud models, teams continue to evolve their decision making around optimisations. As more payment methods enter the landscape, with different cost models and fraud impacts as well as multiple relationships with payment processors and acquiring banks, we are expecting to see some fascinating case studies from the merchants over the next year or two as they refine their approaches.
Do you see any disruptive payments trends emerging that are likely to impact the ecommerce industry in the near future?
It depends on the region we are talking about. In APAC and Brazil (with Pix), local and alternative payment methods are experiencing tremendous growth. These payment methods have yet to be as popular in NA and Europe, though they are coming. There will be a focus on the customer experience, the number of payment choices, and the friction associated with different payment types. In certain areas, Buy Now, Pay Later (BNPL) continues to be popular, and we will begin to see metrics about how it evolves with the economy, consumer behaviours, and regulatory changes. Open Banking, cryptocurrencies, and digital currencies will continue to evolve, and I think we will see more payment interactivity across international zones.
Regarding the upcoming MRC Barcelona 2023 event, what are you most excited about?
The MRC Barcelona conference agenda is lining up to be as exciting as MRC Vegas 2023 was! Our keynote will feature a fireside chat titled The Spotify Payments Story: Unlocking User Choice and Creator Monetization, where I will chat with Spotify about their growth across 184 markets and over 500 million users. We will discuss strategic initiatives to accelerate growth and support the creator economy, building a global payments strategy, how fraud prevention affects their bottom line, and of course, some future gazing into the biggest trends in the coming five years.
I am also excited to hear from merchants about tokenization, how 3DS is faring, and topics around authentication. The topics at MRC Barcelona will be more representative of the region. Since we are launching our first one-day event in Melbourne and then returning to Singapore later in 2023, we are getting a sense of the similarities and unique challenges across different regions.
Finally, we have revived a popular feature – focused roundtables, where merchants get to connect through direct dialog with their peers. We’ve also brought back our smaller member-only conferences that will happen later in 2023 in Santa Clara (California) and Athens (Greece).
I am excited to connect, learn, and catch up with MRC members and colleagues from around the world!
About Tracy Brown
Tracy Kobeda Brown is the VP of Programs and Technology for the MRC. She was head of product for Fragomen, Lockerz, and the CEO of Evil Genius Designs. Tracy created the American Eagle Outfitters website, ae.com, and served as CISO. She earned her master’s degree from Carnegie Mellon and her bachelor’s degree in Economics from The Wharton School.
About MRC
The go-to place for ecommerce payments and fraud professionals across the globe! Established in 2000, the MRC is a global non-profit membership association for payments and fraud prevention professionals. The power of MRC membership lies in staying connected, current, and empowered to influence and transform the industry.
