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BizReport : Ecommerce : September 29, 2021

Study finds CNP fraud of great concern for merchants

Fraudsters continue to develop ways to outsmart merchants of all sizes. That is a key takeaway from new Vesta data which suggests as many as 13% of all global transactions are potential Card Not Present (CNP) fraud.

by Kristina Knight

To put a dollar amount on that, Vesta's experts say that on average CNP fraud transactions cost merchants and brands between $126 and $155 per transaction.

"If you're an eCommerce business doing 5 million transactions per year and 13% of those are fraudulent, you're looking at 650,000 bad transactions, and if each one of those comes with a $25 chargeback fee, you're now looking at more than $16 million dollars in fees," said Ron Hynes, CEO of Vesta. "On the other hand, if you decline too many legitimate transactions in an effort to fight fraud, you end up with significant losses. For example, if that same merchant doing 5 million transactions per year has an average order value of $125 and blocked 30% of all transactions when only 13% were fraudulent, they're now losing more than $100 million in annual revenue. That's what makes CNP fraud such a challenging problem to deal with - you have to strike the perfect balance between fighting fraud while maximizing approvals of legitimate transactions."

Other interesting findings from Vesta's report include:

• Q4 2020 showed the lowest percentage of attempted CNP fraud purchases, it showed the highest per-fraud transaction amounts
• Q1 2020 showed a 13% CNP fraud rate with an average transaction per attempt of $126
• Q1 2021 showed an 11% CNP fraud rate with an average transaction per attempt of $134

Additional data from Vesta's report can be accessed here.

Tags: card not present fraud trends, cnp fraud trends, ecommerce, ecommerce fraud, m:commerce, m:commerce trends, online fraud trends, Vesta

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