As the transition to EMV makes card-present, in-store transactions more secure, fraudsters are getting more creative. They have discovered a weak point in the system: increasingly popular buy online/pick up in-store offerings. ACI Worldwide projects that attempted fraud rates for the process will increase 28% this holiday season compared to last year.
Some may ask why there is particular concern with buy online/pick up in-store services. Simply put, retailers do not require consumers to re-run their payment cards when they pick up products in store, making this channel an attractive theft option for fraudsters.
“We can’t overstate the benefit of a targeted risk strategy based on peak holiday periods to ensure maximum revenue while also minimizing false positives,” said Mike Braatz, Senior VP of Payments Risk Management at ACI Worldwide. “It is also critical for retailers to implement a real-time fraud solution, which continuously monitors fraud behavior and trends across all channels, both online and in-store.”
Digital downloads such as virtual gift cards or e-gifts have the highest fraud rate of any delivery method at 9.55%, followed by next day/overnight shipped purchases at 6.57%, international orders (2.38%) and buy online/pick up in-store (2.15%)
Key Trends To Watch:
Overall, there has been a significant increase in card-not-present fraud compared to last year:
One out of every 86 transactions is a fraudulent attempt, compared to one out of every 114 in 2014, an increase of 30%. This increase can be attributed to the growing popularity of using mobile devices for transactions;
Fraud attempt rates as measured by value have increased by 33% in this period;
The shift to EMV chip cards forces retailers to further secure their card-present transactions, leaving potential swindlers to make more fraudulent attempts on e-Commerce sites;
Additionally, retailers must keep an eye out for more frequent fraudulent attempts, even as the average ticket value (ATV) of each would-be crime has declined, from $282 last year to $273 this year. Lower shipment costs, decreasing goods costs and an overabundance of coupons all contribute to a lower ATV.