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The Turning Point

2013 UK eCommerce Fraud Report

Welcome to the 9th annual UK eCommerce Fraud Report

Our key contributors

  • Dr Akif Khan
    Director, Strategic Initiatives
  • James Hunt
    Senior Managed Risk Services Analyst
 

In my time at CyberSource, I’ve seen online
commerce change beyond all recognition.
Today, we approach a new era; a truly connected, digital world, with the consumer in the driving
seat – looking for a safe, seamless, eCommerce experience, irrespective of device or location.

Our latest report reflects this evolution – we
focus on providing you with the tools and
insight to accept more customers, faster and
more profitably.

We explore more channels, including mobile,
and markets; with guidance on how you can
best optimise the customer journey, and
ultimately, your eCommerce expansion.

I hope you find the report beneficial, and look forward to your feedback.

  • Simon Stokes
    Managing Director EMEA, CyberSource

02 THE CHANGING FACE OF eCOMMERCE

eCommerce Continues to Offer the Growth Opportunity For 2013
Confidence in UK eCommerce is fairly high for many organisations, despite the sluggish economy. In all, 27% of merchants believe there will be no change to their eCommerce revenues. Small and medium businesses estimate the highest growth rates.

Improving Automated Fraud Detection Top Priority for 2013

  • Improved automated detection and sorting accuracy
  • Streamlining the tasks/workflow occurring during the manual review process
  • Improving process analytics
  • Improving chargeback management efficiency
  • Outsourcing portions of your review/screening operations

FOR A MORE IN-DEPTH VIEW
DOWNLOAD THE FULL REPORT »

70%

of merchants expect online revenues to grow over the next year

26%

is the average forecasted revenue increase for those expecting growth

85%

of merchants expect fraud revenue losses to remain static or grow in 2013

Digital Goods
Merchants
Planning

36%

Increase in
Anti-Fraud
Budget

69%

of merchants are
not looking to
increase their fraud
management budgets
for the year ahead

Top Business Priorities for 2013

Top Business Priorities for 2013
 

03 eCOMMERCE Today

Average eCommerce Growth Rates
UK eCommerce merchants are split largely into two groups: those that have seen results flat for 2012, and those that have seen circa 2x growth.

Revenues Lost to Fraud
Fraud losses correlate to market sector, with digital goods businesses seeing the greatest loss rate. This could be due to the fact that digital goods are more accessible and have a lower marginal cost.

FOR A MORE IN-DEPTH VIEW
DOWNLOAD THE FULL REPORT »

29%


average eCommerce revenue growth in 2012

Expected Online Revenue Growth for 2012

Expected Online Revenue Growth for 2012

1.65%

of eCommerce
revenues
lost to fraud

Large Merchants Spend A
Higher Proportion of Revenue
on Fraud Management

04 FRAUD FUNDAMENTALS

With CyberSource’s framework you can assess performance in key areas of your fraud operations: automated screening, manual review, order dispositioning (accept/reject), and fraud claim management. Once you have the foundation, use the results to fine tune operations and increase automation.

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The number of tools used varies, with the largest merchants adopting six or more and the smallest, three to four.

FIND OUT MORE ABOUT
CYBERSOURCE’S DECISION MANAGER »

Order processing rates for manual review vary dramatically. In larger companies each reviewer analyses over 100 orders per day; in others it can be as few as ten.

LEARN MORE ABOUT CYBERSOURCE’S MANAGED RISK SERVICES »

Calculate your profit optimisation point to find the balance between being too relaxed and too strict with fraud strategies. This will vary by business, depend on the type of goods sold, markets served and level of risk aversion.

Sign up for a test account »

Customer acceptance is driving fraud managers’ concerns. Revenue loss now sits outside the top three challenges for fraud managers. The number one concern relates to the risk of rejecting valid orders.

TO FIND OUT MORE DOWNLOAD
THE FULL REPORT »

Fraud Fundamentals

1.26%

of orders are fraudulent (mean) (or 0.5% median)

5

FRAUD
TOOLS

The average used
by each merchant

Fraud Threats of Greatest Concern

Fraud Threats of Greatest Concern

25%

of orders
are reviewed
by merchants

71%

of manually
reviewed orders accepted

% of Transactions Manually
Reviewed for Fraud (BY BUSINESS SIZE)

% of Transactions Manually
Reviewed for Fraud (BY BUSINESS SIZE)

Profit Optimisation Point

Profit Optimisation Point

TOP 3 Most Common Indicators
of High Risk TransactionS

Top 3 Most Common Indicators of High Risk Transactions
 

05 OPENING THE RIGHT DOORS

Italy, Spain and China Top
of Target List

In spite of the economic situation in southern Europe, Italy and Spain are
hot target territories for UK merchants
in 2013.

FOR A SPOTLIGHT ON GLOBAL FRAUD
DOWNLOAD OUR FULL REPORT »

How do you manage alternative payments?
Alternative payment methods are increasingly part of the mainstream eCommerce purchase.

FOR A MORE IN-DEPTH VIEW ON ALTERNATIVE PAYMENTS DOWNLOAD THE FULL REPORT »

Mobile Fraud
Today there is only a small base of merchants who break out fraud rates by channel; of those that do, mobile rates appear to be marginally higher for digital goods and marginally lower for travel.

FOR A MORE IN-DEPTH VIEW OF MOBILE FRAUD DOWNLOAD THE FULL REPORT »

63%

of merchants accept international
orders

24%

don’t accept orders from outside
the UK

 

13%

of merchants to start processing transactions from outside the UK in next 12 months

Flag

65%

of merchants accept non-card payments

25%

of merchants don’t
scan non-card
payments for fraud

Channels Tracked for Fraud

Channels Tracked for Fraud

18%

of merchants don’t currently screen fraud by order channel

78%

screen mobile channel using existing eCommerce Fraud Tools

Mobile Phone

Mobile Fraud Rates Vary Across Sectors

42%

of respondents report the mobile rate is no different to their webstore;

22%

suggest it is higher

36%

suggest
it is lower

 

06 Contact CYBERSOURCE

Tomorrow is Now
At CyberSource, we are dedicated to helping our customers embrace the speed of eCommerce change.
A sophisticated payment and fraud management platform helps merchants innovate faster, so that they can accept more customers, from across more markets, via more devices. Safely.

A single connection makes light work of integration; whilst our global footprint means that we can scale as merchants expand, driving out complexity and enabling growth.

And with over 19 years’ experience, we’re able to gather intelligence from over 400,000 customers based round the world, continually evolving our enterprise-calibre solutions.

For more information, please visit www.cybersource.co.uk

VIEW a complete list of
OUR worldwide offices »

© 2013 CyberSource Ltd, a wholly owned subsidiary of CyberSource Corporation, a Visa company. All rights reserved.

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or email uk@cybersource.com

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