As the busy holiday shopping season approaches, global retailers can expect a 12 percent growth in online fraudulent activity in the upcoming holiday season, compared with the same period last year—and lower ticket prices on fraudster-targeted gifts and products, according to new benchmark data from
ACI Worldwide (NASDAQ: ACIW). The data*, based on hundreds of millions of transactions from retailers globally, provides actionable insights that merchants can leverage to protect against fraudulent activity this holiday season.
Principal findings include:
- Card Not Present (CNP) global online fraud attempt rates are expected to increase 12 percent by volume over the same peak holiday period in 2015—with sales to increase by nearly the same rate (13 percent) in 2016
- Fraud and new business growth are rising at the same rate globally
- U.S. CNP fraud attempt rates are expected to increase by 43 percent by volume
- Following the U.S. adoption of EMV chip cards, which protects card data through encryption, fraud is shifting online as fraudsters are more effectively deterred from in-store fraud
- The 2015 trend of lower ticket prices will continue in 2016, due to alternative shipping methods (e.g. buy online/pick-up in-store), low-priced electronics and promotions
- In the U.S., attempted fraud average ticket value (ATV), or a retailer's average size of individual sales by credit card, is expected to decline from $239 to $219, an 8 percent decrease
- Fraudsters are expected to focus on cosmetics, cordless headphones, sneakers and other lower-priced items (including 'Gift with Purchase' products) that can be easily resold on the black market or via auction websites
"Fraud is increasing at a rate nearly equal to general retail growth globally—and is exponentially increasing in the U.S., due to a seismic shift from in-store to online activity," said Mike Braatz, chief product officer, ACI Worldwide. "And because fraudulent activity is now considered to be an everyday occurrence, consumers and merchants must take every precaution as we head into peak holiday shopping season."
- Attempted online fraud rate by region
- Africa: 4.3 percent, Europe: 3.6 percent, Asia: 3.6 percent, South America: 2.3 percent; North America: 1.6 percent
- The expected peak fraud attempt day will be Christmas Eve, with nearly 2.5 percent fraud, due to the popularity of gift cards and last-minute shopping via buy online-pick up in-store
- Cyber Monday is now expected to have the highest processing volumes of any day of the year—followed closely by Black Friday
"Merchants need to understand their peak days and the sales that drive those high velocity times to ensure risk strategies are effective and efficient," continued Braatz. "It's important to prioritize real-time fraud detection without alienating the consumer experience."
