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
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