While overall e-commerce in the UK grew at a solid 16 percent in 2012, a study by Martec found that payment fraud was up by 23 percent.
Despite this growth, says the report, which surveyed 100 leading UK e-commerce vendors, these online businesses aren’t taking fraud as seriously as they should, and as a result, companies have paid 700 percent more than they should in charge-back fees.
The study found a disjointed approach to fraud prevention, with the responsibility for this area typically in the hands of more than three or four people across an e-commerce transaction. Some 22 percent of respondents were unable to say how much they spent on online fraud prevention, while some e-commerce sites were spending 1.4 percent of sales in this area, with smaller sites investing 0.3 percent of annual sales.
In preventing payments fraud, proactive preparation (as in “preparing for the worst”) is correlated with profitability. Surprisingly, relatively few sellers have accepted the fact that fraud is inevitable and have taken action in consequence. An extraordinarily large number don’t feel that they have to prepare for fraud, even though the inevitability of such attacks is well-established. The “fraud fatalists” uncovered in this study also tend to be the best-educated merchants about the range of fraud technology solutions.
The report comes at the same time as a study by the UK Parliament Home Affairs Select Committee which shows that the country has become the first target for payment attacks by cybercriminals around the world. The report called on UK law enforcement to do more to fight payment fraud and phishing attacks.
B2B e-commerce is on the rise in the UK. At present, total e-commerce accounts for 19 percent of all sales revenue in the country. But only 5 percent of that total comes from B2C e-commerce—the rest is from B2B, according to a report by Prospectsoft. B2B e-commerce now represents 2.35 percent of total gross domestic product in the country, the report shows.
As the volume of e-commerce grows, so will the potential e-commerce fraud. Smart companies who can provide ironclad security and protection for B2B online payments—in real-time, 24/7—along with the rich data that is so critical for B2B, will quickly become the new winners in this new era.