The share of North American ecommerce revenue lost to payment fraud dropped to 2.4% in 2022, down from 3.6% a year earlier, a recent report says.

In today’s rapidly changing payments landscape, staying on top of the latest digital payment options is necessary for B2B ecommerce sellers to deliver a better customer experience and reach new buyers.

So, too, is staying abreast of fraud trends. While B2B fraud does not receive as much media exposure as consumer-related fraud, it is a prevalent and growing problem nonetheless that sellers need to manage effectively.

A new report from The Merchant Risk Council, Cybersource and Verifi, 2023 Global Ecommerce Payments & Fraud Report, notes that North American merchants spend 10% of their ecommerce revenue on average to manage payment fraud. The report also says the percentage of ecommerce revenue lost to payment fraud is 2.4% in North America and 2.9% globally, down from 3.6% a year ago for both North America and worldwide.

The report is based on a survey of 1,072 merchants between November and December of 2022 across North America, Latin America, Europe and Asia Pacific (APAC), representing a broad range of annual ecommerce revenue.

66% of merchants accept digital wallets

On the payments side, bank transfers, digital wallets and cards continue to be the most widely accepted payment methods among ecommerce merchants, with 67% accepting bank transfers/direct debit, 66% accepting digital wallets, and 66% accepting payment cards, up 9% from a year earlier, the report says.


In addition, 50% of respondents accept mobile payments, such as Amazon one-click, down 7% from a year earlier, and 45% accept cash. Another payment option rapidly gaining traction is “buy now, pay later” (BNPL) loans. More than one-third (36%) of ecommerce merchants now offer BNPL, up from about one-quarter of respondents in 2021.

The primary reason ecommerce merchants add new payments is to improve the buyer experience. Other reasons include reaching new customer segments or markets. At the same time, about 90% of ecommerce merchants encourage customers to pay via preferred methods, primarily to minimize fraud risks, maximize how quickly funds become available, and lower processing costs.

Another key takeaway from the report is that ecommerce sellers continue to use multiple payment processors and banks to support omnichannel payments. On average, merchants rely on four payment processors or gateway connections, and three “merchant acquiring” banks to support omnichannel payments. Merchant acquiring banks, or merchant acquirers, manage merchants’ accounts for funds received through credit card payments. The top reasons why sellers utilize multiple merchant acquirers include operational flexibility, geographic coverage, and payment authorizations.


The deployment of new customer-facing and internal payment management approaches by ecommerce merchants is prompting them to track more of the key performance metrics (KPIs) around payments. The top four payment KPIs tracked by ecommerce merchants are payment success rate (50%), revenue (48%), cost of payment (45%), and authorization rate (34%). Respondents could cite the tracking of more than KPI.

Machine learning is more common in fraud management

Regarding payment authorization, ecommerce merchants tend to employ two to three different approaches or techniques. Over the past year, the use of machine learning to fine-tune fraud management, as well as intelligent payment routing, have seen increased adoption, with about 4 in 10 merchants using each of these approaches, up from 35% a year earlier, according to the report.

“While fraud management has historically been seen as a separate function to payment processing, sophisticated fraud management is also seen today as a means of optimizing payment authorization through its emphasis on lowering of false positives and even influencing issuer acceptance by achieving lower merchant fraud rates,” the report says.

On a global basis, merchants continue to spend about one-tenth of their annual ecommerce revenue on managing payment fraud, a figure that has stayed consistent for the three consecutive years the study has been conducted.


“We have also seen a notable decline in the share of merchants who tell us that they ‘don’t know’ or ‘don’t track’ this metric – from 30% in our 2021 study to 23% this year – suggesting that merchants are keeping a closer eye on fraud management spending as time goes on,” the report says.

On the plus side, respondents reported improvement across key fraud management metrics, such as the share of ecommerce revenue lost to fraud, domestic order rejection and fraud rates, and the share of ecommerce orders that led to fraud-related chargebacks. The improvement was most evident in North America, where spending on fraud management rose significantly in 2021.

At the same time, anti-fraud spending rose significantly in APAC and Latin America, as well as among small businesses, suggesting that these segments may hope to see improvement in their fraud metrics in the coming year.

Small and mid-sized merchants spend more to manage fraud

Small-and-medium-sized ecommerce merchants that generate between $50,000 and $5 million in ecommerce annually were among the most active spenders on fraud management solutions. Merchants in this category doubled their estimated fraud management spending over the past year, from 6% to 12% of ecommerce revenue, the report says.


Increasingly, ecommerce merchants are looking to reduce the manual review of suspect orders. About six in ten respondents said they are seeking to reduce or eliminate manual reviews as part of their fraud management strategy. Merchant size plays a significant role in a merchant’s decision to eliminate manual reviews. Small-and-medium-sized businesses are most likely to attempt to reduce manual reviews, while larger merchants are more inclined to continue the process, the report says.

Regarding the type of fraud that ecommerce merchants are experiencing, the top four   are phishing/pharming/whaling, friendly fraud/chargebacks, card testing,, and identity theft.

Phishing/pharming/whaling fraud showed the largest increase in attacks in 2022, with 43% of respondents saying they experienced such, up from 35% a year earlier.

Friendly fraud is also a significant problem, with 34% of respondents saying they experienced it in 2022. In addition, 62% of respondents reported an increase in friendly fraud disputes in 2022. It costs merchants $35 to manage friendly fraud for every $100 in disputes, the report says.


Overall, 18% of all fraudulent disputes should be attributed to first-party misuse, the report says.

When it comes to detecting fraud, the report says the leading tools ecommerce merchants rely on are:

  • Credit card verification services. 55%;
  • Identity validation / verification services. 50%;
  • Two-factor phone authentication. 44%;
  • 3-D Secure authentication. 39%.

Respondents could cite the use of more than one fraud detection tool.

Despite the ongoing challenges ecommerce merchants face in manageming payments and fighting fraud, ecommerce merchants are making meaningful progress on both fronts, the report says.


Peter Lucas is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy.

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