UK merchants see online fraud as the greatest threat they face, according to the Sixth Annual UK Online Fraud Report, an independent survey undertaken by CyberSource, the UK-based CyberSource subsidiary.
According to the survey, merchants stated that they lost an average of 1.8% of online revenue to payment fraud in 2009. On average 1.6% of orders accepted proved to be fraudulent, and the rate at which orders are rejected due to suspicion of fraud remains at an average of 4.6%. In 2007, 6% of merchants ranked theft of customer data as a serious threat, while over the past two years the figure has jumped to over half of merchants.
Over 70% of merchants 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.
However, 23% of merchants use a case management system to support their manual review process, with usage higher amongst larger organisations (33%). 67% of merchants plan to make no changes to the size of their review teams in 2010.
The firm said that 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. In addition, 49% serve the US and 35% Australia. Merchants are planning to add a number of countries in 2010, and China being the number one on their list.
One in four UK merchants that accept international orders stopped serving certain countries due to high fraud levels. For 2010, 69% of merchants are expecting their online revenue to grow year-on-year, up from 51% previously, according to the survey.
Akif Khan, co-author of the fraud report and head of client and technical services at CyberSource, said: “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.
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“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.”
