Security News > 2021 > September > CNP transaction fraud costing merchants millions in revenue, fraudsters getting more sophisticated

The overall percentage of global transactions its system identified as being potentially fraudulent ranged from 10 to 13%, with the average value of each fraudulent transaction ranging from $126 to $155. Fraud attempts are not evenly distributed: fraudulent attempts at individual merchants ranged from 0.8% to over 30% depending on business vertical and geography.

CNP transaction fraud liability lies with the merchant.

A CNP transaction occurs when a sale is made without the customer physically presenting their credit card to the merchant, and when a CNP transaction turns out to be fraudulent, the liability lies with the merchant.

"On the other hand, if you decline too many legitimate transactions in an effort to fight fraud, you end up with significant losses. For example, if that same merchant doing 5 million transactions per year has an average order value of $125 and blocked 30% of all transactions when only 13% were fraudulent, they're now losing more than $100 million in annual revenue. That's what makes CNP fraud such a challenging problem to deal with - you have to strike the perfect balance between fighting fraud while maximizing approvals of legitimate transactions."

Indirect linkage means transactions are linked through a more complex web of elements, often a sign of more sophisticated fraudsters attempting to cover their tracks, which makes it very difficult for merchants to spot.

"The only way to effectively identify and prevent CNP fraud with indirect linkage is with machine learning, and it's critical to use models that have been trained against millions of global transactions and can therefore draw connections that humans simply can't see."

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