For the second year in a row, merchants reported rises across the board in numerous key measures that assess the extent to which fraud affects eCommerce.
From higher income lost to fraud to more eCommerce orders being rejected as fraudulent to increased chargebacks and disputes, the average statistics retailers reported rose internationally over the last year.
The most significant shift in fraud payment prevention spending was recorded in North America, where businesses upscaled their spending two times, from 5% of their annual revenue in 2021 to 10% in 2022, according to data presented by Atlas VPN.
The figures mentioned were extracted from the Global Fraud and Payments Report 2022, in-depth research conducted by the collaborative efforts of Cybersource, the Merchant Risk Council (MRC), and Verifi.
The study included 1,060 merchants active in eCommerce fraud and payment management. SMBs ($50k to <$5mn) amount to 38% of the sample size, Mid-Market ($5mn to <$50mn) to 25%, and Enterprises ($50mn+) to 37%. The poll was conducted in November and December of 2021 globally.
The majority of the companies (60%) were in the physical goods & retail sector, a quarter in the other products & services category, and the remaining surveyed merchants were in the travel & tourism (9%) and digital goods & entertainment (6%) industries. Besides North America, another significant change from 2021 to 2022 appeared in the Asia-Pacific (APAC) region, where companies decreased their allocated part of the revenue for fraud prevention by 6%.
Before, businesses in the APAC area were spending the highest portion of their earnings on payment fraud prevention, but after these changes, they fell in line with the global average, which stands at 10% in 2022.
Mid-market companies allocate most funds
Moving on to fraud prevention by company sizes, interestingly, the average metrics of Mid-market businesses now outnumber those recorded by SMB and corporate eCommerce enterprises.
While Mid-market firms spend an average of 11% of their annual revenue on payment fraud prevention, SMBs only spend around half as much, at 6%.
The reasoning behind this is likely because Mid-market businesses are large enough to be enticing targets for fraudsters yet have lesser budgets and fewer employees, tools, and resources to use for fraud protection. Thus, midsize firms may suffer disproportionately from eCommerce fraud.
