As we head into the fourth quarter of 2021, this week’s payment news roundup looks at holiday payment predictions, potential fraud threats and how to prevent them, and the continuing rise of digitization in the payment industry.
Ecommerce is booming, but there are three kinds of online fraud to watch out for
PaymentsJournal discusses the recent increase in ecommerce, as well as how this higher volume has led to higher payment fraud.
Driven partly by the pandemic, ecommerce has seen a large jump over the past two years, reaching $4.2 trillion dollars this year. In the US specifically, over one in five (21.3%) purchases were made online in 2020, growing 44.0% on the previous year.
However, with this increase in online purchasing also came a rise in online fraud - which increased 70% during the pandemic.
PaymentsJournal lists three types of fraud that ecommerce merchants should be aware of and take steps to prevent:
- Transaction fraud - Fraudsters using stolen cardholder data to make fraudulent online purchases can result in major headaches for retailers. In addition to having to refund the charge, merchants may also find themselves having to deal with chargebacks as well.
- Chargeback fraud - Speaking of chargebacks, those can also be used to perpetuate fraud. PaymentsJournal defines chargeback fraud as “any knowing or unknowing attempt to get money back for items that were delivered.” This can include “friendly fraud,” where the customer initiates a chargeback because they mistakenly think a charge on their account is fraudulent when it isn’t. It can also be intentional, such as when a consumer has “buyer’s remorse” on a large purchase.
- Triangulation fraud - PaymentsJournal touches on a newer type of fraud that is harder to detect. They explain it this way: “A fraudster will put up an eBay listing for an in-demand item, usually at a significant discount, and when it is purchased, the fraudster will use a stolen credit card to purchase the item at full price from elsewhere, shipping it to the eBay buyer. The owner of the credit card will initiate a chargeback, harming the ecommerce store that the fraudster purchased the item from, but will have gotten away with the money from the eBay sale.”
To minimize the fraud risk for both their software solution and your merchants, ISVs should ensure they have robust security measures in place, such as encryption, tokenization, and meeting PCI compliance requirements. Learn more ways to reduce fraud with our series of blogs on payment security.
Processing paper invoices costs businesses average of $171k annually
Pymnts.com released a new report titled The CFO’s Guide To Digitizing B2B Payments. The report discusses the struggles some companies currently face when dealing with manual B2B payments.
The report notes that businesses incur an average annual cost of $171,000 from processing paper invoices. It also found that 74% of accounting staff reported frictions when manually processing invoice data. Further underscoring the benefits of digital B2B payments, the report found that, when firms automated invoicing and expense management, 60% reported a decline in missing invoice cases.
One digital B2B payment method discussed in the article is the use of virtual cards, which give buyers temporary, one-time-use codes for individual payments, avoiding the transmission of sensitive card information.
Digitizing B2B payments has many benefits for businesses, including allowing them to gain greater visibility into these payments, thus also allowing better cash flow management. Learn more about digital B2B payments in our guide.
Deep dive: how banks and payments providers can protect customers, merchants from fraud threats
This month, Pymnts.com took a deep dive into various fraud threats and how banks and payment providers can protect customers and merchants from them. The report noted the following:
- In 2020, personal data theft through hacking cost consumers $43 billion.
- Identity theft cost US citizens approximately $56 billion in 2020, and affected more than 49 million customers.
- 62% of businesses said business email compromise (BEC) was the main reason for fraudulent activity in 2020.
The article recommended banks and payment providers implement various fraud prevention methods beyond password protection, such as biometric authentication or multifactor authentication (MFA). Both of these methods are expected to continue their upward growth, with the market value for MFA predicted to surpass $20 billion by 2027.
Retailers embrace early holiday shopping to combat tangled supply chains
With the holiday shopping season starting earlier this year due to supply chain issues, Pymnts.com expects a busy last few months of the year for retail. They noted Mastercard’s projection that retail sales will be up 7.4% year over year between November and December and up 11.1% compared to 2019.
Buy now pay later (BNPL), which has already seen major success during 2021, could be a big winner during the holiday season as well. Research from Pymnts.com and Amazon Web Services (AWS) found that, over the past 12 months, 29 million Americans, or 11% of consumers, have used a BNPL service. Salesforce research predicts that, globally, 8% of all orders will use BNPL going into the holidays - which is nearly double the share seen last year.
Find out what other payment trends we expect to see in the 2021 holiday season in our recent blog entry.
Capgemini’s world payments report 2021
Capgemini released their World Payments Report 2021, examining recent payment trends and future projections. Notable findings include:
- Nearly 45% of consumers frequently use mobile wallets to make payments (>20 transactions a year) - up from 23% in the 2020 poll.
- It’s estimated that global B2B non-cash transactions will increase to reach nearly 200 billion transactions by 2025 - up from 121.5 billion in 2020.
- While global non-cash transactions decelerated in 2020 due to pandemic uncertainty, they are projected to grow at 18.6% CAGR (2020-2025 Forecast), and reach 1.8 trillion in volume by the end of the forecast period.
With digital payment methods on the rise, our Guide to Contactless Payments provides a great primer on the topic.
Whether you’re interested in the latest in payment technology, or just want to stay up to date on the latest payment trends, we can help. For the latest payments industry news, make sure to subscribe to our blog.