While the cost savings of digital transformation across retail and the financial services can be considerable, so can the surging costs courtesy of fraud.
And businesses across EMEA are finding the costs of fraud surging with nearly three and a half times the amount of each transaction lost to fraud, according to the LexisNexis True Cost of Fraud study EMEA.
The picture varies across the region, with businesses in South Africa incurring the biggest losses, with a 41.5% surge in fraud since 2019. Netherlands saw a 34.6% increase, France 27.2% and Germany 12.3%.
“Fraud has become more expensive for businesses in part because the volume of human and bot-originated fraud continues to target transactions at scale,” says Jason Lane-Sellers, director of fraud and identity for EMEA at LexisNexis Risk Solutions.
The other side of the story, adds Lane-Sellers is that “consumer transaction habits are changing and cybercriminals are adapting to these behavioural patterns”.
Cybercriminals diversify fraudulent activities
Due to digital transformation, consumers are now using an increasing number of channels to pay, which means cybercriminals have been able to attack a wider set of payment methods, and this has driven up the costs of fraud to new highs.
Credit transactions accounted for nearly half of fraud losses in 2019 when looking at costs by payment methods, and while they still account for the single most fraud losses by payment method, the latest report finds a marked increase in losses from digital wallets and direct deposit payment methods.
The research further reveals a proportional resurgence in losses from so-called traditional payment methods such as cash, cheque or gift cards, as many economies emerge from the pandemic.
Identify verification a growing challenge across EMEA
A growing challenge across EMEA markets has been that of identity verification, with a surge in fraudsters using synthetic identities created by using a combination of fabricated information and personal information for a real person to build a new digital identity.
For businesses, it can be difficult to flat these as fraudulent synthetic identities include some legitimate data.
Businesses need a multi-layered offensive
With more consumers using a variety of channels to transact, there is no one-size-fits-all solution for businesses wanting to authenticate digital identities and reduce fraud losses.
Therefore, businesses need a multi-layered offensive, says Lane-Sellers, one that uses technology and data sources to combat fraud and stave off financial losses.
“The increasing sophistication of some cybercriminals in deploying synthetic identities is one example where more robust, multi-layered solutions can dramatically reduce the risk to a transaction chain,” he concludes.