BNPL, digital wallets accelerates growth of e-commerce fraud: study

Global e-commerce fraud will exceed $48b in 2023, and 22% will be from Asia.

Growth of e-commerce fraud will be accelerated by the increasing use of alternative payments, notably digital wallets and buy now pay later or BNPL, which are creating new fraud risks, according to England-based market researcher Juniper Research.

The total cost of e-commerce fraud to merchants is expected to exceed $48b globally in 2023, with 22% of this coming from the Asia Pacific region, their study found.

Online payment fraud counts losses across the sales of digital goods, physical goods, money transfer transactions and banking, as well as purchases like airline ticketing. Fraudster attacks can include phishing, business email compromises and socially engineered fraud.

Juniper Research gave particular focus to BNPL, naming it as a major risk going forward.

ALSO READ: Boom or bust? Buy now pay later flourishes but with default risks rising

“Given the delayed nature of BNPL payments, fraudsters can make several illegitimate payments using stolen card details before the fraudulent activity is identified, creating significant risk. In turn, the research recommended that BNPL vendors conduct robust identity verification at the point of onboarding to mitigate these risks,” Juniper Research said in the report.

Vendors are called to build platforms providing AI-powered risk-based scoring as a measure against fraud.

“To combat this fraud, e-commerce merchants must implement simple steps such as address verification, combined with risk-based scoring on transactions, which will allow merchants to best mitigate the massive fraud threats present,” added research author Nick Maynard.