The global payments ecosystem continues to witness exponential growth in digital commerce. In 2021, Forter saw a 51% increase in total payment volume (TPV) year-on-year from 2020. In 2022, this is forecast to increase by 65% compared to 2021. At the same time, this increase in transactions brings another problem: digital commerce fraud.
Merchants need to have a detailed understanding of their payment profile to manage threats and balance risk. According to the Merchant Risk Council, the amount merchants spend to tackle online fraud increased five-fold between 2019 and 2021. In 2019, ecommerce merchants spent an average of 2% of their annual revenue on fraud prevention. By 2021, that share had grown to 10%. However, it’s a battle merchants are continuing to lose. Additional data collected from the European Central Bank stated the total value of fraudulent card transactions amounted to €1.03bn in the eurozone.
However, as merchants become increasingly aware of the costs of fraud, they realise the need to deploy fraud prevention solutions. Many merchants utilise such services provided by an existing payment service provider (PSP). However, this approach could cost merchants in the long-run, as increasingly sophisticated fraud tactics necessitate equally intelligent tools to combat the threat.
The challenge for PSPs
PSPs have to balance their own portfolio risk exposure, with interests in high conversion rates of all of their merchants, particularly in the EU where PSD2…
