Mercator Advisory Group agrees with the author’s supposition that those in the business of perpetrating fraudulent transactions would be inclined to take a path of least resistance. The expansion of higher levels of security put into place at the in-store point of sales (POS) locations triggered by widening adoption of ‘chip & PIN’ would indeed redirect efforts by cyber criminals to alternate avenues.
Online fraud transactions are expected to reach $25.6 billion (£17.6 billion) by 2020, up from $10.7 billion (£7.4 billion) last year. By the end of the decade, it’s expected that $4 (£2.7) in every $1,000 (£687) of online payments will be fraudulent.
Quickly doing the math, that translates to a projection of 0.4% online fraudulent transactions in 2020. Now, while that seems to be small potatoes and might be seen as the cost of doing business, the need to mitigate this gap has become a vibrant sector, with an influx of investment in fintech firms developing solutions for identity authentication and contextual verification.
Three hot areas for online fraud by value in 2020 will be eRetail (65 percent – $16.6 billion or £11.4 billion), banking (27 percent – $6.9 billion or £4.7 billion) and airline ticketing (six percent – $1.5 billion or £1 billion)
Mercator Advisory Group believes the drive for improve online payment authentication extends beyond the financial exposure fraud creates to encompass the need to protect the brand of the business being targeted. Publicized instances of fraud carries with it a perception of porous security beyond payment information and transaction credentials. Further, the migration of the world’s second largest economy from industrial to services opens greenfield for fraudsters to expand. We anticipate the business of identity authentication and securing transactions will register broad investment in 2016.
Overview by Joseph Walent, Senior Analyst, Emerging Technologies at Mercator Advisory Group
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