Digital Transactions Authoritative, insightful and timely information for payments professionals
E-commerce merchants and the payments companies providing them with merchant services have reason to be both happy and disappointed with the 2015 holiday season.
On the one hand, merchants handled the voluminous number of e-commerce orders by using their physical stores to fulfill their online sales. The volume of these orders, from Thanksgiving through Dec. 31, increased 72% over the same period in 2014, says eBay Inc.
Retailers are endeavoring to make it easier for consumers to shop regardless of whether they do so in stores, online, or via smart phones and tablets. That increases the frequency of orders, which puts pressure on a merchant’s fulfillment system. That’s why many turn to fulfilling online orders from their stores instead of relying solely on warehouses. A store may be closer to the shipping address.
In other upbeat e-commerce news, ACI Worldwide Inc., a Naples, Fla.-based fraud mitigation specialist, said e-commerce transactions from Thanksgiving through Dec. 31 increased 21% over the same period in 2014.
On the other hand, fraud attempts rose 8% over the same period a year ago. They were highest on Christmas Eve, with fraud attempts accounting for 2.4% of all e-commerce transactions. Thanksgiving (2%), Black Friday (1.8%), and holiday shipping cut-off dates (1.6%) came next, ACI says.
Two trends affected this. One was the use of electronic gift cards. A popular last-minute gift purchase, these cards have the highest fraud-attempt rates across all products. The other was the buy-online/pick-up-in-store delivery method, which has a higher fraud-attempt rate than other delivery models, ACI says.
Indeed, attempted fraud for buy-online/pick-up-in-store delivery soared 47% over last year, much more than the 28% increase ACI forecast in November.
Fraud, especially the online variant, is generating a lot of attention in the payments industry. This is especially evident as the U.S. EMV migration continues and merchants and payments companies cast a wary eye on an expected increase in online fraud. The anticipation even provoked the Federal Reserve System’s triennial Payments Study to double the number of fraud-related questions from 11 to 23.
A separate survey for networks, processors, and issuers is expected to have new questions about fraud types and where fraudulent transactions originate.
