Fraud Costs Rise, Challenging Online Businesses
One in eight online UK merchants lose more than 5% of revenue to fraud
READING, U.K. – January 28th, 2009
Fraud is taking a bigger bite out of UK online revenues. One in eight businesses in 2008 suffered fraud losses in excess of 5% of total online revenues, while rates of more than 1% are now common. The figures come from a survey of 150 online merchants undertaken by CyberSource Ltd., the UK-based subsidiary of CyberSource Corporation. The survey was conducted by research group Vanson Bourne—the findings constitute the fifth annual UK Online Fraud Report, available now.
40% of merchants saw their rate of fraud loss increase in 2008; slightly more saw their rates remain static. Overall, the rate of fraud increased 2.6%. Rates for approximately 13% of merchants climbed more than 20%. 37% of merchants now see revenue losses due to online fraud of 1% or more. But the cost of fraud cannot be measured in direct losses alone: more than one fifth of merchants reject over 5% of orders on suspicion of fraud, and some of these orders are likely to be valid. Merchants also have to shoulder the cost of implementing various anti-fraud tools and employing staff or outsourced service providers.
"UK merchants continue to bear a heavy burden of fraud, including high costs and consequent profit losses," commented Dr. Akif Khan, co-author of the Fraud Report and the head of client and technical services for CyberSource Ltd. "There are hopes for promising new anti-fraud developments coming from government, but even with this kind of support the merchants' principal protection will, for the most part, remain the tools and programmes that they can assemble in their defence."
The losses come despite continued investment by merchants in tackling the fraud problem. The addition of support for the Verified by Visa and MasterCard SecureCode schemes has been the most popular anti-fraud investment in 2008 with 16% of merchants integrating the programmes. Approximately 60% of UK merchants now employ these services. The report also showed that many merchants continue to rely heavily on manual reviewers to identify fraud, with 10% reviewing every single order.
"Manual review often forms part of a merchant's defence against fraud, but as a first line of defence it is both expensive and inefficient," added Dr Khan. "With margins under pressure in today's challenging economy, merchants should be looking to improve the use of automated fraud screening processes so that they only need to review those orders that are flagged as suspicious. This could have a significant impact on the cost of managing fraud."
About the CyberSource UK Online Fraud Report
A widely referenced source of information about the state of fraud in the UK's online industry, the report this year examines data from more than 150 merchants and 1000 consumers. Now in its fifth annual edition, the report was compiled by respected market researchers NOP and Vanson Bourne. Chief architect of the report is Dr Akif Khan, head of client and technical services for CyberSource Ltd.
To obtain a copy of the survey results - for journalists: please call Sarita Singh or Danielle Cook on:
+44 (0)1628 628080. For all others: please visit http://www.cybersource.co.uk/ukfraudreport
About CyberSource Ltd.
CyberSource Ltd is the UK-based wholly-owned subsidiary of CyberSource Corporation (NASDAQ: CYBS), a leading provider of electronic payment and risk management solutions. CyberSource solutions enable electronic payment processing for web, call centre, and point-of-sale environments. CyberSource also offers industry leading risk management solutions for merchants accepting card-not-present transactions. CyberSource Professional Services designs, integrates, and optimises commerce transaction processing systems. Over 245,000 businesses use CyberSource solutions, including half the companies comprising the Dow Jones Industrial Average. The company is headquartered in Mountain View, California, and has sales and service offices in Japan, the United Kingdom, and other locations in the United States including Bellevue, Washington and American Fork, Utah. For more information, please visit the CyberSource Ltd web site at www.cybersource.co.uk or email email@example.com.
For more information:
Sarita Singh/Danielle Cook +44 (0)1628 628080 firstname.lastname@example.org
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