What Australia’s $639m CNP Fraud Problem Means for Retailers
In my role at ACI Worldwide, my fellow fraud consultants and I constantly share information from all corners of the globe. One recent bit of intelligence that immediately caught my eye, and I shared with colleagues across the world, was the staggering cost of card-not-present (CNP) fraud here in Australia.
CNP fraud accounts for 78% of all payments-related fraud in Australia. And to say it is a challenge for retailers—and the industry as a whole—is a vast understatement. With the astounding growth in eCommerce sales, this is not a problem in decline; it is rising aggressively and shows no signs of abating.
What does the future hold then for growth in CNP fraud and eCommerce sales? The Australian eCommerce market was worth A$32.8b in 2016. CNP Fraud sucked out A$400m, or 1.21%, of the total value. If the fraud rate were to simply stay flat, Australian online retailers will see around A$639m drained out of the market by fraud in 2021.1 Maybe more disturbing though, is that there is strong evidence that the growth of CNP fraud is expected to be anything but flat in the foreseeable future. Analysis of CNP fraud trends over the period August 2016 – July 2017 revealed that fraud attempts increased by 120% in volume over the previous 12 months. The same data showed the percentage of fraud attempts at online retailers close to tripled in December 2016 over the previous month. This should serve as a wake-up call for organizations to be more proactive in fighting CNP fraud.
Projected growth of eCommerce in Australia
Gearing Up Your Organization
Now that we see what’s at stake, fixing it is just a matter of getting a new fraud system, right? If only it were that easy. Building a best-in-class fraud system takes time, hard work and sometimes a shift in organizational thinking.
Here are a few ways to start mitigating your CNP fraud risk:
- Internal buy-in: Clearly articulate the value of effective fraud prevention across the entire business to secure the funding necessary to maintain effective protection, especially as the business grows and expands across borders and sales channels.
- Install Safeguards: Ensure that tokenization and encryption technologies are adopted to increase payment security and simplify compliance.
- Build Your Toolbox: Gain access to tools and services that will enable;
- Fast, effective data integration across channels
- Real-time and post-transaction fraud screening across channels
- Capability for adaptive machine learning within the transaction authorization path
- Flexible rule strategies and queue definitions
- Easy-to-configure user interfaces for operators and analysts
- The ability to turn fraud and payments data into actionable intelligence
- Ability to profile genuine customer behaviors (as well as fraud indicators) to minimize unnecessary friction
Australia’s battle against CNP fraud is one we must all take personally. As shown, even if the fraud rate stays level, the problem will become much bigger. As an industry, we all win when we fight the fraudsters. I will personally be watching closely for when the data is published next year. In the meantime, if you’d like to discuss how we can help, please contact our local expert fraud team or call our fraud consultants serving the APAC region (Tel: +61 (0) 2 9512-0200).
1) Based on calculation from Global Data
Related Blog Posts
When Is Processing Payments in The Cloud More Secure?
Back when I started my career, “Jessie’s Girl” by Australian rocker Rick Springfield topped the charts, the federal funds rate was 20 percent and most organizations were reliant upon one or more mainframe computers that were hosted in an internal “computer room.”
Oh, the Different Ways to Pay Today (Not by Doctor Seuss)
Mark, Mega Millions tickets cost 2 dollars now?!? I don’t have 2 dollars in my wallet... I don’t have any dollars in my wallet!
And due to my lack of paper currency, if I’m not in it, I can’t win it. And I wanna win it, which has got me to thinking (again) about the new(er) ways to pay. When we last tackled the topic, I think we were ranting about wearable rings, speedos, the Rio Games and maybe Ryan Lochte’s hair. We’re now approaching a saturation point when it comes to places (on the body) to put payment mechanisms (especially if you’re in Rio!).
Payments' Big Five: what We Will be Hearing about in 2018
The new year is here… so while resolutions are enacted, and almost inevitably broken before the month is out, it is also the time to look ahead at what the next year may bring. One thing that is clear is that payments will become an even more important ingredient in the business strategy of every merchant. From my perspective, these are the five trends that will have the biggest impact in 2018.
The Eba's Regulatory Technical Standards Provide the “How” to Psd2's “What”
February 2017 saw the release of the long-awaited draft regulatory technical standards (RTS) for strong customer authentication (SCA) from the European Banking Authority (EBA). The RTS defines the technical framework for the implementation of PSD2 with primary focus on SCA, and common and secure connection (CSC). In short, we could say that PSD2 covers the “what” aspect of the regulation whereas the RTS defines the “how” this is to be done.
The Bank of the Future: 2040 and the Reality of Ar and Vr
Mark, when I envision the bank of the future, I imagine Twiki and Buck Rogers at a casino. Or maybe I once dreamed that—I’m old and my mind is going. So what are we talking about and what can we envision when it comes to the bank of the future? And by future, I’m talking about 2040, before certain cities might be flooded (by water). But I digress, as this isn’t a post about climate change.
Oh Payment Trends
As the first flakes start to fall and the smells in the air start to change (as my esteemed colleague Seth mentioned in his recent post), my favorite sign of the holiday season begins to appear—the trends to watch in the coming year.
Dumbing down Payments and FinTech Jargon… Just in Time for the Holidays!
Mark, is there a slightly less insulting phrase for “dumbing down” something? I ask because there are some terms and topics making bigly waves today and many/most consumers outside of payments/banking/fintech/tech might not understand their significance and why they should care. With that, can we take a moment to simplify these terms and topics, while also conveying their importance to the masses—from your mother-in-law to your daughter’s daycare provider to “the old man sitting next to me making love to his tonic and gin” (I’m a sucker for Billy Joel).
The Art of Open Banking, Part 2: on the March
In the first part of my talk with @digitalbankguru (aka Mark Ranta) and @Lui_Zurawski (aka Lu Zurawski), we discussed plans that best prepare an organization for Open Banking, and in this second chapter, we explore some use cases for delivering value.
What Makes Latin America an Attractive Market for Cryptocurrencies? [¿Qué Hace a Latinoamérica Un Mercado Atractivo Para Las Criptomonedas?]
Cryptocurrencies are one of today’s hottest topics – seemingly in every corner of the globe. Bitcoin continues to be the most popular – and certainly the most well-known – though digital currencies have been blossoming at an unprecedented pace recently. There are currently more than 16 million Bitcoins in existence, and it is expected that there will be more than 22 million by 2022. Worldwide acceptance is growing, with over 9,800 businesses registered on the Coinmap website, compared to 2013 when there were only 133 businesses registered.
The Art of Open Banking, Part 1: Laying Plans
I recently had a great discussion with @digitalbankguru (aka Mark Ranta) and @Lui_Zurawski (aka Lu Zurawski) on what it takes to be ready for the revolution in Open Banking. It was a truly global discussion, with stories from North America, Europe and Asia; the conversation part philosophical treatise and part strategy roadmap. Following is a summary of the first part of our wide-ranging discussion on preparing for the Open Banking era.