2015 global
online fraud
panorama
DOCUMENT D’EXECUTION
INGENICO_PAYMENT_CMJN.ai
INFORMATIONS GENERALES
Client: INGENICO
Date : 03 MAI 2014
COULEURS UTILISEES
APPROBATION
Online fraud / context and trends
Any business wishing to sell online has to understand the
potential impact of payment fraud. Ingenico Payment Services
here presents a global online fraud panorama that enables you
to better understand fraud trends worldwide.
Global e-commerce sales reached $1.5 trillion in 2014*, a 20.1%
increase in sales compared with the previous year. Sales are
expected to further increase to $2 trillion by 2016 and $2.5
trillion by 2018.
Key growth factors include rapidly expanding online and
mobile user bases in emerging markets, increased m-commerce
sales, advancing shipping and payment options, and the push
into new international markets by major brands.
Online commerce has become mainstream. The increasing flows
of money going through connected commerce (whether they
are traditional online, mobile or cross-channel) also capture
more and more attention from fraudsters. Last year, both
the number of data breaches and the fraud chargeback rate
increased significantly.
Online commerce is more vulnerable than traditional commerce:
60% of card fraud in Europe is associated with online payments**.
Online fraud can be very costly for merchants, with estimated
cost between 0.3% and 3% of revenue.
Merchants willing to counter fraud effectively have to find
the right balance between fraud prevention technics and
converting visits into sales.
key
learnings
Overall average fraud
chargeback rate increased
from 0.40% in 2013 to
0.47% in 2014.
High discrepancies per industry
depend on exposure to fraud
and on maturity level of the
industry.
High discrepancies per
country depend on card
share in the segment,
adoption of 3-D Secure
and maturity of the market.
Smaller merchants tend to
rely more on 3-D Secure while
large merchants prefer to opt
for their own fraud detection
tools and processes to avoid
extra customer friction.
Fraud chargeback rate is
higher when the amount is
above 30€ (> 0.5%) with a
peak at 100-150€ (0.83%).
Amounts lower than 30€
are less exposed to fraud
chargeback (< 0.3%).
* eMarketer - December 2014
** European Central Bank - February 2014 - Third Report on card fraud
Fraud chargeback rate per industry
Percentage of EUR transaction volume reported as fraud chargebacks based on merchant’s industry - Large corporate companies
ALL INDUSTRIES
ALL
0.47
Software
0.89
Financial services
Software (0.89%), Financial Services (0.79%),
Gaming (0.59%), Gambling (0.56%) and Retail
(0.45%) are the industries with the highest
fraud chargeback rates.
0.79
Gaming
0.59
Gambling
Industries such as Airlines (0.37%) where
fraud is more prevalent show maturity in
fighting online fraud and have a lower fraud
chargeback rate. Some other industries
are less exposed to fraud due to the type
of product or service provided, for example
Media & eContent (0.31%).
0.56
Retail
0.45
Travel
0.37
Media & eContent
0.31
0.2%
0.4%
0.6%
0.8%
1.0%
Discrepancies per industry depend mainly on exposure to fraud and on maturity level of the industry. Fraudsters tend to
focus on products or services that are high value and/or easy to resell such as Consumer electronics, Ticketing and Travel
tickets. Some industries where margins are very high and where the cost of a chargeback is quickly absorbed tend to have
greater willingness to accept a higher chargeback rate as they want to avoid turning down revenues. This is true in the case
of the Software and Gaming industry, for example. In comparison, industries that are heavily attacked and where margins are
very tight have developed high maturity in fighting fraud and keep the fraud chargeback rate as low as possible. Industries that
behave in this way include Airlines & Travel or some Retail activities.
3-D Secure adoption rate per industry
Percentage of EUR transaction volume going through the 3-D Secure authentication process based on merchant’s industry Large corporate companies
ALL INDUSTRIES
ALL
8
Financial services
For large merchants, 3-D Secure is mainly
used in risky industries such as Financial
services, Retail, Gambling or Travel.
18
Retail
12
Gambling
9
Travel
9
4%
8%
12%
16%
20%
3-D Secure adoption is very low in industries where orders are mainly via mobile devices or are for small amounts and
where the cost of fraud chargebacks is easier to absorb as margins are high. For instance Software (2.76%), Gaming (0.99%) or
Media & eContent (0.03%).
Fraud chargeback rate per order value
Percentage of EUR transaction volume reported as fraud chargebacks based on the order value - Large corporate companies
1.0%
0.83%
0.69%
0.60%
0.54%
0.61% 0.62%
0.47%
0.5%
Fraud chargeback rate
is significantly higher
when the amount of
the order is between
100 and 150 EUR.
0.27%
RA
GE
R.
EU
R.
AV
E
0
50
>
25
0
0
15
EU
R.
0
EU
50
0
25
15
0
10
50
R.
EU
R.
0
EU
R.
0
EU
10
50
30
-
30
10
<
10
EU
EU
R.
R.
0.15%
Fraud chargeback rate per consumer country
Percentage of EUR transaction volume reported as fraud chargebacks based on consumer country - Large corporate companies
1.5%
1.31%
1.2%
0.9%
0.80%
0.74%
0.68%
0.58%
0.5%
L
GL
O
BA
co
ex
i
na
Ch
i
a
Ru
ss
i
n
ai
Sp
lg
iu
nd
m
s
Be
y
er
la
an
N
et
h
m
ce
Ge
r
Fr
an
m
ng
do
Ki
te
d
U
ni
U
ni
te
d
St
at
es
0.3%
0.30%
il
0.36%
M
Global fraud
chargeback
rate is 0.47%
0.47%
0.47%
0.40%
Br
az
0.40%
an
0.50%
Ja
p
0.6%
Mexico 1.31%
Netherlands 0.80%
France 0.74%
USA, UK, France, Mexico, Brazil, China and Russia are the main countries where higher online fraud rates are perpetrated. In the
US and UK, online merchants have had longer experience of dealing with fraud issues and therefore address the online fraud
problem with more focus than in the other countries. For example, in France, online merchants have only recently started to
develop the expertise and fraud prevention tools to tackle online fraud more effectively. In some countries (e.g.: Mexico), the
fraud rate is high due an intense fraud activity, a lower merchants maturity and the non-use of 3-D Secure and therefore lower
opportunities for merchants to shift liability.
3-D Secure adoption rate per consumer country and business size
Percentage of EUR transaction volume going through the 3-D Secure authentication process based on consumer country Large corporate companies and all merchant tiers
100%
90%
80%
70%
60%
44%
40%
34%
24%
13%
9%
All merchant tiers
L
Large corporate companies
BA
ex
i
8%
5%
GL
O
2%
co
il
n
Ja
pa
in
a
Ch
a
Ru
ss
i
n
ai
Sp
um
Be
lg
i
er
la
nd
s
an
y
et
h
4%
2%
N
Ge
rm
m
Fr
an
ce
Ki
ng
do
4%
M
3%
U
ni
te
d
St
at
es
13%
11%
21%
3%
2%
ni
te
d
19%
Br
az
11%
U
22% 22%
20%
19%
18%
20%
For large corporate companies, overall adoption is
lower than 10% (8.34%) while across all merchant
tiers, the figure reaches 34.4%.
Countries with lowest adoption are Mexico (4.7%),
Brazil (4.3%), Japan (3.9%) and the United States
(3.1%).
Small merchants rely more on 3-D Secure to
lower their fraud risk. Across all merchant sizes,
adoption is highest in The Netherlands (89.9%),
Belgium (70.4%) and the United Kingdom (43.7%).
The higher the adoption, the higher the chance
the consumer will drop off his order as he might
not know how to proceed or not be willing to
perform this extra authentication step.
Methodology used for the 2015 global online fraud panorama
This 2015 global online fraud survey involves online transactions made between January, the 1st of 2014 and December, the
31th of 2014. Large corporate companies sample provided by GlobalCollect. Ingenico Payment Services and GlobalCollect are
part of the Ingenico Group, the global leader in seamless payment.
More information about online fraud?
Visit http://payment-services.ingenico.com/fraud
for videos, white papers, case studies and more.
DOCUMENT D’EXECUTION
INGENICO_PAYMENT_CMJN.ai
INFORMATIONS GENERALES
COULEURS UTILISEES
Client: INGENICO
Date : 03 MAI 2014
Utilisation: Impression quadri.
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