There’s no question that Card Not Present (CNP) fraud is a major concern for merchants – especially when more customers prefer to shop online for their goods every day. It is much easier to commit fraud in a CNP situation as the merchant has fewer options. For example, in a live situation, a customer service representative can take steps if he or she gets suspicious during the point of sale. He or she can examine the card for possible signs of fraud, ask for ID if the card isn’t signed, etc.
However, in CNP situations, merchants must invest in security safeguards to ensure their and their customers’ interests are protected. This is especially the case because merchants will bear the cost in CNP fraud cases. As most merchants have very tight margins, this could have a significant impact on a merchants’ bottom line. But merchants aren’t the only ones affected by fraud. We encourage you to download the eBook, Calculating the Deadly Costs of Fraud, to learn more, but here are obvious and less obvious costs that affect both merchants and consumers.
The Worst Costs of Fraud
- There was a 200% increase in fraud losses in 2015. This amounted to 1.32% of total revenue.
- For every $1 in ecommerce fraud, this led to $2.27 lost in fees and fines.
- 90% of reviewed orders were ultimately approved by half of merchants.
- Every $1 spent by merchants on IT fraud prevention led to as much as $10 in TCO costs.
- $14.5 billion in lost sales from fear of fraud.
- Twice as many order cancellations by merchants
- Lost shipping expenses as items with highest shipping costs much more likely to be fraudulent order.
- Investigation into fraud means more revenue spent on employees who command highest salaries for their expertise.
- Increased costs of goods and services for customers.
- Lost time and money on customers’ part trying to get their accounts in order.
As the risk of fraud goes up due to customer preference and more sophistication on the part of the criminals, it’s important for merchants to have a strong strategy to mitigate the risk of fraudulent activity. This is where First Atlantic Commerce can help. We encourage you to contact us today to learn more about our online credit card processing services and fraud and risk management services from award winning anti-fraud technology provider, Kount, to enhance security.