Fraud Prevention Performance: A Growing Concern for Merchants and Financial Institutions

A recent study by LexisNexis Risk Solutions has shed light on the growing concern of fraud prevention performance among merchants and financial institutions in the Asia-Pacific region.

Key Findings

Manual Review Rates Soar to 45%

The study reveals that manual review rates have increased significantly, with 45% of orders requiring human intervention. This not only increases operational costs but also slows down the order-to-cash process.

Mobile/Digital Wallets Pose a Growing Fraud Risk

The rise of mobile and digital wallets has led to a growing fraud risk for merchants and financial institutions. If breached card data is used during card enrollment, it can pose significant risks. Strong authentication processes and tools are essential to mitigate these risks.

Identity-related fraud remains a top challenge for Japanese retail and e-commerce merchants and financial institutions. Synthetic identities, lack of real-time transaction tracking tools, and difficulty determining order location contribute to this challenge.

Fraud Prevention Performance Lags Behind

The study highlights that fraud prevention performance is lagging behind, with:

Order approval rates at 39%
Automatic decline ratio at 36%
Chargeback rates at 34%
Fraud loss costs as a percentage of sale ratio at 33%

Challenges in Accepting International-Based Payments

Merchants face challenges when accepting international-based payments, including limited access to third-party data sources and the rise of synthetic identities.

Recommendations

The study emphasizes the need for businesses to adopt robust fraud prevention strategies to mitigate these risks. By leveraging technology, such as artificial intelligence and machine learning, merchants can improve their fraud detection rates and reduce operational costs.

Conclusion

The LexisNexis Risk Solutions report highlights the growing concern of fraud prevention performance in the Asia-Pacific region. As the digital landscape continues to evolve, businesses must stay ahead of the curve by adopting innovative fraud prevention strategies to protect their customers and reputation.