German E-commerce Market: Combating Online Fraud with Robust Prevention Measures
Germany ranks third globally in terms of e-commerce market potential, according to the A.T. Kearney Global Retail E-Commerce Index 2013. this boom in online commerce, however, brings with it an increased risk of fraud. In response, German merchants are employing tailored fraud prevention measures to protect both consumers and businesses.
Rising Fraud in Germany
Historically, fraud in Germany was low due to the prevalence of domestic debit cards. However, with the growing adoption of electronic payments, fraud has migrated to the online space. According to Euromonitor International, fraud totaled €144.3 million in 2012. Approximately 70% of these losses were due to:
- Card-not-present transactions: €103 million in losses
- Counterfeit fraud: roughly 20%
Addressing Cross-border Fraud
Germany’s relatively lower investment in fraud detection technology has made it an attractive target for fraudsters. The country experienced 28% of EMEA’s phishing attacks and accounted for USD $386 million in losses. To counteract this trend, German issuers are taking active steps to address cross-border fraud.
Shifting to Mobile Commerce
The shift to mobile commerce is driving the need for sophisticated fraud prevention strategies. With 30 million smartphones expected to be sold in Germany in 2014, merchants must adapt to mitigate the higher mobile fraud rates. Some important points to consider:
- Prioritize real-time fraud detection
- Implement solutions suited to both individual product segments and preferred payment types
Prevalent Payment Methods and Fraud Prevention
Payment methods such as bank transfers and direct debits - prevalent in Germany - possess distinct risk profiles. Merchants accepting these alternative payment types must ensure effective risk management, regardless of the payment method in use. By tailoring fraud prevention strategies to these payment methods, German merchants can safeguard their businesses and consumer trust.
Conclusion
Protecting consumers and businesses from online fraud in the booming German e-commerce sector is essential. By prioritizing real-time fraud detection and implementing tailored solutions for both individual product segments and preferred payment types, German merchants can effectively mitigate fraud risks and maintain consumer trust.