Online payment fraud costing U.S. merchants billions

The '2016 American Express Digital Payments Security Survey' reveals that 70% of merchants in the U.S. have seen sales conducted via digital channels rise in recent times.

However, the report reveals that sales could be much higher if it wasn't for payment fraud. Overall, nearly half (48%) of online shoppers who have made a purchase online in the past twelve months - or about 80 million consumers - have experienced payment fraud.

Furthermore, 42% said they had abandoned an online shopping cart due to security concerns, rising to 50% among Millennials and 48% among Generation X.

The problem hasn't gone unnoticed by merchants. Six in 10 said they had had experience with online sales fraud and a quarter believe the issue is increasing. According to a recent report from Juniper, $10.7billion was lost to online payment fraud last year.

However, there is a solution. Online shoppers said they are willing to undertake additional steps in the purchase process, such as entering a CVV code. Currently just 57% of merchants ask for this code. Consumers also said they were open to creating online profiles (63%) to make it easier to verify a purchase, yet less than half of merchants currently offer this solution.

Online payment fraud comes in a few guises. Phishing - where hackers trick users into providing sensitive information through clicking on malicious links - is the most common form. The other most prevalent form is fraudulent chargebacks.

Tags: banking, ecommerce, fraud, online payment