Card-Not-Present Fraud is On the Rise: 5 Statistics to Prove It

Written by: Rich Stuppy

If you become a victim of fraud and you don’t have mitigation capabilities in place, you can lose a massive amount of money, and your ability to conduct credit card payments online is in jeopardy.

And one of the most pervasive forms of fraud that plagues online retailers today? Card-not-present fraud.

What is Card-Not-Present Fraud?

Card-not-present fraud occurs in transactions — such as those conducted online, over the phone or on mobile — where the buyer is not required to physically present the card to the retailer to complete the purchase. Because it’s difficult for eCommerce retailers to verify the actual cardholder, card-not-present fraud has increased in parallel with the rise of global digital commerce.

Why is Card-Not-Present Fraud On the Rise?

Fact: EMV technology has led to an 80 percent decrease in card-present fraud.

When the payments industry made the shift to EMV or “chip” credit cards, the security of card-present transactions experienced a boost, leaving fraudsters in the dust. But as a result, fraudsters have moved to other, less secure channels to commit fraud — primarily, online.

Fact: Card-not-present fraud is now 81 percent more likely to occur than in-store, or card-present, fraud.

Fraudsters don’t really care where they commit fraud, so they’ll work as hard as they need to work to make the money they need to make. They’re constantly probing for the next trick or tactic to commit fraud without getting caught, and right now, the most attractive option for doing so is online sales.

Fact: The amount of credit card data available on the dark web has increased by 153 percent over the past year.

As data breaches become more frequent and more severe, fraudsters are experiencing easier access to financial data, such as credit card numbers, account usernames, and passwords. This information would have been difficult to get before, but as it increases in abundance, it’s much easier for fraudsters to do their dirty work.

Fact: By 2023, retailers will lose about $130 billion in revenue on fraudulent card-not-present transactions if they fail to keep up with digital fraud prevention measures.

Card-not-present fraud can cause major financial damage to your business — and the first indication is an increase in chargebacks. Every time someone uses a fraudulent credit card to chargeback one of your products, they take the money and the product, and your bottom line suffers.

Fact: More than half of consumers changed their shopping behaviors after a fraud event, including closing their accounts, switching online retailers, and shopping less online.

Every time a fraudulent transaction goes through your business, your relationship with your customers will suffer. They’ll lose trust in your business and decide to shop elsewhere. Today’s digital economy is increasingly focused on delivering superior, friction-free customer experiences, and if your business is constantly being targeted by fraudsters, you can’t possible provide the valuable experiences that your customers want.

But here’s the good news: You can provide those top-notch experiences and strengthen your fraud prevention technology at the same time.

Protect Your Business (and Your Customers) With World-Class Fraud Prevention Technology

Some developers think that they can write their own set of fraud protection integrations — but in the cat-and-mouse game that fraudsters like to play, you need to be constantly working every day to improve those protections and respond to advances in fraud techniques.

If you’re a proactive developer, you can demonstrate an outsized amount of value to your company by leading the charge for a single integration with an end-to-end payment provider like BlueSnap, with built-in fraud prevention technology from Kount.

Kount’s world-class fraud prevention technology is powered by an immense amount of data; as transactions flow through the fraud protection system, its advanced machine learning capabilities detects and deters fraud from a single platform.

And the best part is, the technology operates invisibly behind the scenes, giving developers the ability to imagine a frictionless customer journey without the fear of fraud.

The Takeaway

You have thousands of rules and regulations they need to follow, but the fraudsters only care about two rules: take the money and don’t get caught. Because fraudsters can move faster and take shortcuts that honest retailers can’t, the work you do to maintain security and prevent fraud is never over.

Card-not-present fraud can be conducted from anywhere around the world; it can be automated and is scalable. If you’re not proactive about preventing fraudulent purchases, then you’re setting your business up for revenue loss, reputational damage, and more.

Don’t wait for the fraudsters to get to you first. Contact us today or visit our fraud prevention documentation to learn more about how the BlueSnap-Kount integration can help protect your business from card-not-present fraud.


rich-stuppy

Rich Stuppy, Chief Customer Experience Officer at Kount, is responsible for client success, data analytics, and ensuring Kount’s users have the best customer experience. Collaborating directly with customers, he works to inform Kount’s product roadmap, identify new and emerging threats, and drive innovation for ultimate customer satisfaction.

 


 

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