The survey revealed an increased awareness and concern about the theft of customer data. In 2007, just 6% of merchants ranked it as a serious threat. Over the past two years this figure has jumped to over half of merchants. It now ranks second only to online fraud in importance. Merchants stated that they lost an average of 1.8% of online revenue to payment fraud in 2009.
According to the survey, merchants continue to rely on manual review. Over 70% of merchants surveyed manually check orders as part of their fraud management process. 5% manually review every order. 69% of manually checked orders are ultimately accepted, with one-third of merchants accepting more than 91% of reviewed orders.
Based on the survey results, on average 1.6% of orders accepted proved to be fraudulent, although rates under 1% were common. The rate at which orders are rejected due to suspicion of fraud remains high at an average of 4.6%. This figure has been relatively consistent over the years and points to a continuing challenge for eCommerce merchants, since some of the rejected orders are likely to be valid, resulting in lost revenue.
A high proportion of UK merchants already accept orders from mainland Europe, the Americas and Asia Pacific. France, Germany, Italy and Spain are each served by over half of the merchants accepting international orders. According to the survey, one in four UK merchants that accept international orders stopped serving certain countries due to high fraud levels – with 60% of respondents citing Nigeria as an example.
Akif Khan, co-author of the fraud report and head of client and technical services at CyberSource, said: “Online fraud represents a significant revenue loss for merchants. It’s not just the cost of fraudulent orders that needs to be considered, but also the additional costs of rejecting valid orders, administration of fraud claims and paying for the maintenance of internal systems.
“These figures haven’t changed significantly over the last year and it’s a cause for concern that so many manually reviewed orders are actually accepted. Manual review represents a critical area of profit leakage. If not managed effectively it can be expensive, limit scalability and impact customer satisfaction. Merchants should focus on improving the accuracy of their initial automated screening so that only truly suspicious orders are subject to this additional layer of authentication.”
The sixth annual UK online fraud report survey was conducted by research group Vanson Bourne and was commissioned by CyberSource. The survey was conducted between September 15 – October 9, 2009 and yielded 204 qualified responses. The sample was drawn from a database of companies involved in eCommerce activities.
California-based CyberSource solutions enable electronic payment processing for web, call centre, and POS environments. CyberSource also offers risk management solutions for merchants accepting card-not-present transactions.
