Online fraud will cost merchants around £1.6bn this
year, according to a survey by CyberSource, a US provider of
electronic payment and risk management products.
The cost, which is 8% higher than last year, emerges from a
survey that also shows that for companies with annual online
revenues of between £3 million and £15 million, online fraud losses
are likely to affect nearly 2% of their revenue.
According to the survey, most merchants continue to rely on two
basic means of fighting fraud: address verification systems, which
compare the address on file at the card issuer to the billing
address provided by the cardholder, and checks of the card
verification number - the additional digits printed on a credit
card.
What’s likely to hit merchants more than the fraud is the loss
of confidence by online buyers. The recent rash of identity fraud
and blended phishing attacks, coupled with more spyware worries, is
enough to make even hardened online shoppers think twice before
using a credit card online. It’s not just the net virgins that need
convincing – it’s the power users too.
