Global expansion is the way forward for businesses looking to upscale in 2023 and beyond. The past few years have laid the foundation for international expansion, and now more and more merchants are embracing the opportunities.
But as they’re venturing into new markets, certain challenges appear along the way. One of them is cross-border payment. While businesses might be familiar with the fraud situation in their home market, new territories present new fraud obstacles.
Here is why fraud familiarisation is key to success and what are the fraud profiles of some of the major markets.
Mitigating fraud challenges with fraud familiarisation
Card-not-present fraud (CNP) is one of the biggest cross-border fraud challenges. In 2020, global CNP fraud cost merchants £27,171 billion ($32.39 billion), and this number is expected to increase to £34,076 ($40.62) billion by 2027.
Cross-border ecommerce is an appealing target for fraud rings, as there are a high number of payment paths created by overseas suppliers, contractors, or international subsidiaries that can be attacked. These payment paths may become hard to manage, thus becoming a weak spot for fraudsters.
To mitigate the international expansion fraud risks, merchants need to familiarise themselves with the fraud challenges of the market they’re expanding into. The best way to do so is by utilising existing data to build fraud profiles and match that with a robust fraud solution.
North America: tackling synthetic identities
In a post-pandemic world, North America has experienced a significant increase in fraud. In 2021, fraud attacks increased by 140% in the U.S. compared to 2020, and by 52% in Canada. This is the largest year-on-year increase the region has seen, and it’s in part due to the sudden boom in online transactions.
Some of the biggest fraud challenges for merchants in the region include synthetic identities and other account-related fraud. The reason for that is the struggle to find the balance between fraud detection and an outstanding customer experience.
Merchants expanding in the region need to focus on verifying digital identities and evaluating transaction risk. A fraud solution that leverages machine-learning, cybersecurity, and the deliverance of a seamless digital experience is the key to tackling synthetic identity fraud.
The golden era of fraud in Europe
During the COVID-19 pandemic, Europe experienced its golden era of fraud. The advancement of fraud tactics matched with the new Strong Customer Authentication (SCA) regulation presented merchants with severe fraud concerns.
Fraud innovation was under way and more vulnerable links, such as account creation, account login, and payment forms, were largely at risk. Fraud challenges such as return fraud, fraudulent fulfilment disputes, and synthetic identities flourished.
The key to overcoming these challenges is adopting innovative fraud solutions that utilise data about historical and real-time transactions to capture red flags and approve genuine orders through automation.
Account takeover dominates China
Currently, China is experiencing a monument market growth with online sales reaching just over the £1.67 trillion ($2 trillion) mark in 2021. But there is one weak link that is giving way to fraudsters – the lack of fraud tools.
Ecommerce is moving with such a rapid pace that merchants have no time to step back and secure their online shops. To keep up with the rapid growth and the implementation of new technology across social media and ecommerce platforms, account takeover took precedence as the main fraud challenge.
Merchants need to build a data pool of transactions to help them use advanced digital tools, such as automation and machine-learning, thus securing their transactions.
Tapping into the buyer’s profile in Latin America
Latin America has experienced the most rapid ecommerce growth given its previous stagnation. In 2021, the region reached £71 billion ($85 billion) in ecommerce sales, which is a 25% increase from £57 billion ($68 billion) in 2020. Nevertheless, the region has also been faced with heavy financial instability. Amid the two, fraud attacks emerged.
According to Cybersource and MRC’s 2021 Global Fraud Report, 3.5% of ecommerce transactions in Latin America during 2021 were fraud attempts, higher than the global average of 2.6%.
To protect your business from fraud attacks in the region, it’s important to develop an understanding of buyers’ shopping behaviour. Each sector has a different type of a persona, and that informs the types of fraud risks and fraud protection you’re going to use.
Gather consumer behaviour data about the region you’re expanding into and match that with a robust fraud solution tool to detect fraudulent transactions and approve genuine ones.
With the right use of fraud solutions and the implementation of data, you will be able to guard your business against any type of fraud attacks in the new markets you’re expanding into. As a result, you will optimise your revenue and thrive as a business.
Sources
https://financesonline.com/ecommerce-fraud-statistics/
https://www.signifyd.com/ecommerce-pulse-data/2021-state-of-fraud-report/
https://productcoalition.com/the-evolution-of-e-commerce-trends-statistics-in-2022-aff201983269