Whitepaper:
Industry data states that losses from online payment fraud in the U.S. and Canada have steadily increased as eCommerce has continued to grow 20% or more each year. A leading industry report estimates that in 2006 US$3.0 billion in online revenues was lost to online fraud.1 Merchants have being combating fraud using various techniques and technologies, but even so, 81% of merchants are engaging in manual order review, and on average one third of all orders are reviewed, resulting in high transaction costs.
On the whole, the threat of online fraud has led merchants to over-compensate, spending large sums on looking for, and blocking, suspicious transactions. While they have probably succeeded in minimizing the number of fraudulent transactions that get through, there has been insufficient attention paid to the false positives that lead to loss of revenue from legitimate customers. It may well be that considerably more revenue is lost from spurned customers, than is lost from fraud.
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