The fight against online payment fraud in Europe varies according to differing business priorities and cultural attitudes
· 80% of UK businesses surveyed wish to eliminate fraud altogether
· Only 32% of e-commerce businesses in Germany try to eliminate fraud completely
· In the Netherlands, just 1 in 3 e-commerce businesses view protection as a priority
· French retailers are the most affected by online fraud in Europe
Ogone, a leading online payment service provider and part of the Ingenico Group, recently conducted the first pan-European survey(1) on e-commerce companies to find out what measures they take to combat online fraud and what their expectations are in terms of fraud management.
Driven by the increased confidence of a growing number of online and mobile buyers, card not present (CNP) transactions are growing in Europe. For merchants wishing to expand abroad, e-commerce brings both opportunities and challenges. According to a recent European Commission report(2), 53% of European consumers have made at least one purchase online in the last twelve months from September 2012. Although it inevitably implies a higher risk of fraudulent transactions, this significant growth foretells a bright future for the European B2C e-Commerce market, which is expected to double in size by the end of 2016 to reach €625bn (according to Ecommerce Europe) .
Each market is different, with its own logistics, local preferred payment methods, varied levels of fraud and indeed its own attitudes to fraud. Both consumer behaviour and merchant attitudes to the importance of fraud prevention also vary according to individual markets, depending on current market size and experience of fraudulent attacks.
Recent research carried out by Ogone found that online retailers across Europe adopt completely different behaviour towards fraud management in this highly competitive market:
· British merchants are managing to keep online fraud growth below CNP growth levels and are determined to eliminate fraud altogether due to the fast growth of e-commerce and m-commerce. 71% of UK consumers have purchased online in the last 12 months, the second highest rate in Europe.
· In Germany, even the largest online retailers are more pragmatic than elsewhere and aim to contain rather than to eliminate online fraud. Only 32% want to completely avoid default payments due to fraud, whereas this figure is significantly higher in the UK (80%), The Netherlands (61%),
Belgium (54%) and France (55%).
· In the Netherlands, retailers are the least likely to have experienced fraudulent transactions and only 1 in 3 sees fraud protection software as a business priority.
· In France where merchants appear to be the most affected by online fraud (according to the findings of the research), merchants see fraud management as a priority and interest in fraud management tools is very high, albeit at a relatively simple, functional level. Their estimates of lost business were twice as high – 1.4% of total online payment turnover compared to 0.6% elsewhere.
· Belgian merchants believe fraud management support needs to be as comprehensive and efficient as possible, in order to minimise their own involvement and resources in managing the process. In Belgium, 47% of online shops consider 3-D Secure customer identification to be a central element of any fraud management process, while the percentages are considerably lower in the UK (22%) and Germany (29%).
“Our research revealed that e-commerce businesses for whom online payment is still in its infancy or with low online payment sales typically feel confident of their fraud management procedures. However, as their online sales grow they will have to face the increasing challenge of trying to authenticate a significant share of their transactions manually” commented Ludovic Houri, Chief Sales Officer, Ogone. “Regional differences reflect levels of activity in the specific markets, as well as different payment systems in place, but the results also indicate that cultural attitudes may be influencing e-commerce businesses views to some extent”.
According to this research, 14% of the polled e-merchants had not implemented any fraud prevention tool; even though Europol reported that card fraud losses amounted to 900 million euros in 2011(3).
Ogone’s ‘’Online & Mobile Payments: New Opportunities & Threats” report can be downloaded at: http://www.ogone.com/en/landingpages/whitepaper_fraud
(1) This recent research comprised 253 telephone interviews with e-commerce businesses in the UK, Germany, France, Belgium and the Netherlands, ranging from those who handled fewer than 100 transactions per month to those processing in excess of 10,000. The survey included e-commerce businesses which already use a fraud detection service as well as those who do not have an automatically built-in fraud detection product.
online, payment, fraud , Europe ,differing business, priorities , cultural attitudes