With the fear of the Novel Corona Virus, people are now spending the majority of their time inside the four walls of their home. This lockdown has lead to a stupefying rise in online shopping. Although online shopping has no borders, the location of the retailer is extremely important if you wish to avoid any kind of frauds. As more and more online shoppers are getting access to a variety of payment methods, the online ecommerce merchants are earning opportunities to grow their sales revenue. However, the cross-border transactions still impose a great threat of payment fraud. In fact, studies have proven that successful online payment frauds in international online, as well as mobile, occur more than 2 and half times than that of domestic channels. Here, by successful frauds, we are excluding the fraudulent attempts. Well, did you know that using mobile channels to sell online adds up to 3.5% additional risks of frauds? In this article, we will be talking about the countries that have the highest fraud cases for ecommerce.
What is Ecommerce Fraud?
When online fraudsters thieve payment information or leverage the bank account or credit card details to make a fraudulent purchase without the knowledge of the account owner, it is termed as ecommerce fraud. The ratio of ecommerce fraud is on the rise for a decade. One of the major reasons for a credit card or other ecommerce frauds is due to the integration of computer chip in them. The advantage of using a chip-integrated credit card for online transactions is that it has induced a reduction of more than 52% of the online frauds. However, fraudsters are still managing to accomplish fraudulent activities online without the requirement of a physical credit card or any other payment cards. Another significant reason for ecommerce fraud is the risks of compromised identity and payment data due to data breaches. Such compromised data makes it easier for fraudsters to access consumer accounts. Moreover, with the advance of automation technology, fraudsters are now able to automate fraudulent transactions easily by getting access to abundant compromised data.
What countries have the highest ecommerce fraud cases?
It is a known fear of ecommerce merchants of going global due to the higher chances of ecommerce frauds. However, despite the risks involved, they are also aware of the advantages of selling globally. If you are one such ecommerce owner, wanting to go global without being held back by the fear of ecommerce fraud or other risks involved, you must be aware of litigable information. Understanding the reasons behind and the differences of the countries that are prone to ecommerce frauds and the ones that are not are essential for you to plan your business growth as well as stay alerted from ecommerce frauds. It is learnt that the countries that are prominent in ecommerce frauds are the ones with low economic conditions and adequate internet facilities. Moreover, the ease of use in mobile phones for customers is also easy for fraudsters helping them get payment and other data in a jiffy. Due to these reasons, we have penned down a few countries that have the highest ecommerce fraud cases to help you establish your global ecommerce easily and efficiently:
Romania has made to the top five countries of prevalent ecommerce frauds with about 10% of fraudulent transactions as per the research conducted by an Israeli Internet Security Firm, Forter. The total value of ecommerce frauds in Romania alone was recorded two years back to 12.3 Million Romanian Leu. Well, did you know that Romania was tagged by Ookla as the home to third highest broadband internet speed in the world? The high rates of ecommerce frauds in the country are the very reason that large online retailers are not delivering to this country, especially the USA.
Mexico is home to an exceptional climate for ecommerce frauds. The banks of Mexico reported ecommerce frauds worth the US $480 million and amongst this, 48% were reported to be credit card frauds. This country has huge reluctance in implying automated fraud detection tools. Sensibly, the Mexican citizens are exposed to high risks of online payments fraud. Although the fellow citizens are yearning for better online security, the rise in online shoppers is skyrocketing.
There are more than 66.4 million ecommerce users in Brazil, wherein about 69% of the online transactions are done using credit cards and about 24% transactions are done with boleto bancário which is a type of bank transfer. In spite of such high usage, the country is suffering from 3 to 6 fraudulent transactions occurring per minute. It would not be arguable to reveal that the yearly online frauds and scams account to more than BRL 70 billion. Brazil, along with Mexico is amongst the top-ranked countries for ecommerce fraud cases.
Studies have reported that the fraud rates in the continent of South Africa are 10 times higher than the compiled average of the world. A survey revealed that 63% of South African localities’ prefer offline shopping than online shopping. Despite all these, the increase in online shoppers, as well as ecommerce platforms, is surging considerably. With this increase, the rise in online frauds escalated quite high due to which 19% of organizations had to spend 10 times more on losses due to online crimes than the investigations of the same.
The ecommerce fraud rate of South America was recorded to be three times higher than the compiled average of the world. Within this continent, Venezuela was the worst convict with one-third of its transactions being fraudulent. Venezuela has volatile exchange rates making buying and selling of goods and services a hard choice. After China, Venezuela is known to be a country with the riskiest IP country which equals to 30 times riskier than the average population. Moreover, about 33% of the online transactions in Venezuela are fraudulent.
Global research has found that approximately 35% of ecommerce transactions in Indonesia are fraudulent. Over one-third of the online transactions are fraudulent in Indonesia. According to the research conducted by Forter, Indonesia tops the list of the countries with the highest fraud cases for ecommerce globally.
How to prevent ecommerce frauds?
As an online seller, you would not even want to imagine receiving a fraudulent order wherein you’ll lose an expensive product without getting any payment apart from the chargeback fee you may incur due to it. Here are a few practical ways by which you can prevent ecommerce frauds to a great extent:
- If you have not started selling online, a great way is to pick a webstore that offers you with a fraud alert system. If you are planning to sell online through established marketplaces, it would already be integrated with such fraud preventive measures.
- Use the right payment gateway or processor and learn all the details about it, especially if you are dealing with high volumes of online sales.
- Communicate with your payment gateway provides to ensure payments accepted only via 3D secure which implies to transactions involving one-time passwords per order. Also, consider blocking foreign cards that could impose a high risk to data security.
- In case the billing address and the shipping address of an order are different, be extra cautious and consider confirming the order with your customers.
- Verify your customers’ identification and consider getting your customers sign when receiving the order.
- Be cautious with the delivery services or the shipping method you choose.
- Pay attention to the shipping address if it is a public area where the chances of fraudulent orders could be high.
We hope that this article is sufficient for you to choose the country you service to wisely. However, you might have also noticed the risks involved in cross-border selling. Fortunately, there are many ways by which you can avoid fraudulent ecommerce cases including trustworthy online tools. Nothing can stop an ecommerce seller is what we believe. Stay alert and keep selling!