Payment fraud refers to an unauthorized or fraudulent transaction using a payment method such as credit cards, electronic bank transfers, checks, or mobile wallets. Overcoming and minimizing payment fraud is a continuing process for many businesses because of its prevalence and continued evolution, with fraudulent transactions costing businesses over $41 billion in 2022.
Whether you are a small business or a large-scale one, learning about payment fraud trends will help you be more prepared to manage them. To increase your fraud awareness, we put together some key payment fraud trends and statistics you should know in 2024.
Key Takeaways:
- Payment fraud is on the rise along with the rise of newer payment methods, such as payments through mobile apps, QR codes, digital wallets, cryptocurrency, etc.
- Implementing stronger security measures, such as customer authentication, identity verification, and fraud prevention tools, helps in decreasing the risk of payment fraud.
- More businesses are moving toward using new technologies in fraud management such as machine learning, automatic fraud detection, and multiple authentication tools.
Ecommerce Payment Fraud Statistics
1. Ecommerce payment fraud is on the rise around the world
In 2022, global ecommerce fraud losses amounted to $41 million. It is expected to reach $91 billion in 2028, a staggering increase of more than 2000% over six years.
2. Payment fraud accounts for 38% of identity-related fraud globally
Among global identity-related fraud, 31% happens during new account creation, 31% happens during logins, and 38% happens during payment transactions.
3. In-person payment fraud continues to be a concern
Payment fraud is more prevalent in online transactions. However, in-person payment fraud is still a concern globally, with 28% of the global average fraud losses coming from the in-person payment channel. Some of the common in-person payment methods that may have a higher risk of fraud are payments using credit cards, loyalty/gift cards, mobile wallets, and cash.
4. Ecommerce payment fraud is more prevalent in North America
North America has the highest number of fraudulent transactions in 2023, accounting for 42% of ecommerce fraud which accounts for around $15.96 billion in merchant losses.
Credit Card Fraud Statistics
5. Fraud in card transactions has been increasing globally over the past years.
The total value of losses due to card fraud globally in 2022 is $33.45 billion, an increase of 17.66% from 2020’s $28.4 billion. This is the largest increase since 2018.
6. In the first three quarters of 2023, card fraud is the most frequent type of payment fraud
According to the Federal Trade Commission (FTC), there were 1,805,533 fraud reports for the first three quarters of 2023. Out of those reports that included a payment method, 41.45% were transacted using a credit or debit card.
7. People who have a credit or debit card are likely to experience card fraud
In a 2022 study, 65% of people with credit or debit cards have experienced card fraud at least once. This figure is up from 58% in 2021. Some people have experienced card fraud more than once, with 44% of people reporting they’ve had two or more fraudulent charges which is higher than 35% in 2021.
8. The typical amount of a fraudulent card transaction has increased by more than 27% from 2021 to 2022
The average transaction amount for fraudulent card transactions in 2021 is $62. This average amount increased to $79 in 2022. The total value of attempted fraudulent transactions amounts to around $12 billion.
9. Friendly fraud remains a challenge
Friendly fraud or first-party chargeback is the second most common type of card payment fraud experienced by merchants globally, accounting for 34% of fraudulent transactions, with 62% of merchants reporting an increase in friendly fraud since 2021.
10. Merchants are fighting against friendly fraud
With the prevalence of friendly fraud, merchants are more determined to deal with them. Up to 89% of merchants report submitting compelling evidence to combat disputes.
Authorized Push Payment (APP) Fraud Statistics
An authorized push payment fraud occurs when a person is deceived into authorizing a payment to an account that they believe belongs to a legitimate payee, but in reality, goes to a fraudster. This type of fraud often involves social engineering or deceptive tactics to manipulate individuals into making these unauthorized payments. APP fraud is often through peer-to-peer (P2P) or account-to-account (A2A) transfers.
11. Authorized push payment fraud is a growing threat
The losses in the US to this type of fraud in 2022 was 1.94 billion dollars. This figure is expected to increase to 3.03 billion dollars in 2027, an increase of more than 56% over five years.
12. APP fraud is a serious concern in the UK
In the UK, APP fraud accounts for 40% of fraud losses in 2022. According to data from Payment Systems Regulator, as much as £348 was lost to APP fraud for every £1 million pounds of transactions sent in 2022.
The Rise of Fraud and New Payment Methods
13. Fraud in payments skyrocketed from 2021 to 2022
There was $3.07 billion lost to payment fraud in 2021. This jumped by more than 50% to $4.61 billion in 2022.
14. Cryptocurrency and bank transfer payments have a higher risk of fraud
The biggest contributors to payment fraud value from 2021 to 2022 are cryptocurrency payments and bank transfers, which both doubled during this period. Cryptocurrency payment fraud losses jumped from $755.1 million in 2021 to $1,444.2 million in 2022, while bank transfer fraud losses increased from $762 million in 2021 to $1,591.8 million in 2022.
15. Businesses lose more to fraud than the actual amounts lost
In North America, the cost of fraud to businesses in 2022 is 3.74 times higher than the amount lost to fraud, which is an increase of 14% from 2019 to 2022.
Payment Fraud Business Impact
16. Businesses are willing to spend more on fraud management
Most businesses plan to increase their budgets for fraud management from 2023 to 2024 by 8% to as much as 19%.
17. Data management is a top-most business challenge when it comes to fraud management
Among the challenges faced by merchants in managing fraud in 2023, the top three most reported challenges are effectively using data to manage fraud (38% of merchants), identifying/responding to emerging fraud attacks (34%), and keeping up to date on rule changes by payment and card networks (32%).
18. Efficiency in fraud detection and management is a top priority of businesses
Among the top areas that merchants would like to improve on in the next 12 months are fraud analytics (53%), automatic detection accuracy (41%), and chargeback dispute process (38%).
19. Strong authentication tools can significantly reduce fraud
In the UK, 75% of retailers report a decrease in online payment fraud after the mandatory use of Strong Customer Authentication (SCA).
20. More businesses are using machine learning to manage fraud
There is increased adoption of the use of machine learning in fraud management, with 35% of merchants using it in 2022 increasing to 41% in 2023.
21. Businesses think machine learning tools significantly help in managing fraud
Around 90% of businesses expressed confidence in machine learning in fraud detection and prevention, while 87% expressed a high level of confidence in customer authentication.
22. Consumers feel more secure when a transaction requires physical authentication
Physical biometrics is reported by 85% of consumers as their most trusted and secure authentication method.
Frequently Asked Questions (FAQs)
Click through the sections below to read the answers to common questions on payment fraud:
Globally, payment fraud has been on the rise, with significant increases in losses reported over the years. In 2022, global ecommerce fraud losses amounted to $41 million, and it’s expected to reach $91 billion in 2028.
According to data from FTC, the most number of fraud reports are with the use of credit and debit cards. However, the payment methods with the highest share in fraud reports in terms of value losses are cryptocurrency and bank transfers.
Payment fraud statistics indicate a notable increase in payment fraud losses over the years. From 2021 to 2022, the total losses to payment fraud globally jumped from $3.07 billion to $4.61 billion, marking an increase of more than 50%. Additionally, global ecommerce fraud losses increased from $41 million in 2022, and it is expected to reach $91 billion in 2028, showcasing a substantial upward trend.
Bottom Line
Keeping an eye on payment fraud statistics and trends is vital. Payment fraud, like unauthorized transactions, is a persistent problem that can hit your business hard. Learning about the latest fraud tricks helps you be ready and protect your business, especially with the rise of new payment methods.
Implementing strong security measures and using tech tools like machine learning can make a big difference. Stay informed about fraud stats in your area, so you can take steps to secure your transactions. Having a more proactive stance on payment fraud will not only protect your business but also build trust with your customers.
