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Chapter 10: fraud management and security

Authored by: Paul Brock, CyberSource Corporation

Introduction

To understand how to approach online fraud management for the Canadian market, it is first useful to understand key, end-to-end process metrics. These below are derived from CyberSource Corporation’s annual survey of online fraud among U.S. and Canadian merchants. Following that discussion, we’ll discuss general best-practice approaches and how the nuances of the Canadian market impact the tuning and appli- cation of these practices for Canadian orders.

Sub-topics:

  • Key metrics

  • Validation services

  • Canadian market: unique factors and conditions

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

N=432

N=330

N=341

N=308

N=348

N=384

N=2006

N=284

N=399

N=317

Overview

Over the past ten years, the percent of online revenues lost to payment fraud has been stable or declining. From 2006–2008, the number was 1.4%. In 2009, it declined to 1.2%.

1.2%

0.5%

0.0%

3.0%

3.6%

1.7%

4.0%

3.5%

2.5%

2.0%

1.5%

1.0%

Figure 10.1: % Revenue Lost to Online Fraud

    • 3.2

      %

    • 2.9

      %

1.8%

1.6%

1.4%

1.4%

1.4%

Key Metrics

The percent of accepted orders that are later determined to be fraudulent has also been relatively stable or declining. Over the past six years, the average has hovered around 1.0. In 2009, the rate was 0.9%, the first time this rate has dropped below the 1% threshold.

Put more simply, merchants are accepting a higher percentage of orders. In 2008, the overall order rejection rate due to suspicion of fraud dropped to 2.9% compared to 4.2% in 2007. By 2009, that number had dropped to 2.4%.

Visa e-commerce cross-border handbook for U.S. retailers

Copyright 2010 Visa. All rights reserved.

10-1

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