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As merchants seek to create competitively seamless checkout experiences, security is often sacrificed to remove friction from the transaction. This creates blind spots that are ripe for fraudsters to exploit. Here, we discuss how to maintain the balance between convenient and secure checkouts and how Visa supports these efforts through AI risk scoring, background verification, and tokenization.
What is the security cost of frictionless payments?
The pursuit of higher conversion rates has created new opportunities for fraudsters looking to take advantage of a “speed first” approach to checkout. For example, reducing the thredhold for additional customer verifications might increase approvals but also leave checkouts more exposed to fraud.
Speed itself is not the enemy; in fact, it’s essential to compete. But striving for “zero friction” without real-time back-end verification can create liability that impacts the customer experience – and the bottom line.
Thankfully, frictionless checkouts don’t have to come at the expense of fraud prevention. The key is moving security behind the scenes, where smarter security adds friction only where a transaction actually needs it.
How do frictionless checkouts create fraud risks?
Consumer demand for instant, frictionless checkout is making manual card entry obsolete. Guest checkouts dropped from 44% in 2019 to 16% by 2025, while one-click options like Click to Pay grew 28%, according to VisaNet data.
However, rushing to eliminate every second of friction without securing the perimeter creates blind spots. As of Visa Q4 FY23, online transactions that lack verification are nearly twice as likely to be fraudulent as those that are authenticated, leaving checkouts directly exposed to targeted attacks.
It’s not friction removal, but relocation
Stripping away checkout friction to speed things up should never compromise security.
Yet relying on manual reviews is too slow, and, while rigid static rules block some threats, they also reject 6% of valid orders out of suspicion. This causes 35% of consumers to permanently abandon merchants after a single false decline, adding to the 3% of total revenue to fraud already lost annually.
That’s why fraud prevention requires more than front-end verification. Merchants can implement layered controls across the entire transaction lifecycle, including real-time risk assessment, identity signals and post-purchase dispute management. This broader approach matters as more than 60% of merchants have reported rising first-party misuse (AKA friendly fraud), with the average cost to manage and resolve a single dispute surpassing $80.
Shaving seconds off checkout may feel efficient, but it can cause repercussions post-checkout in operational drain, lost inventory and heavy chargeback fees.
Shifting to background verification
As front-end fraud checks are reduced, bad actors exploit these unguarded perimeters at scale.
Automated botnets now drive widespread credential abuse, impacting 65% of merchants while card testing affects 39% of sellers. Stored merchant accounts have become prime targets for account takeover (the unauthorized hijacking of a customer’s account using stolen credentials) while synthetic identity fraud and theft driven by these tactics are growing concerns for many businesses.
Furthermore, millisecond evaluation windows across instant-payment rails leave little time for manual intervention as scammers steal an estimated $1 trillion globally over 12 months, according to research cited in Visa’s 2025 Anti-Scam Playbook.
To reduce fraud without slowing down checkout, it’s important to verify data in the background instead of adding customer-facing steps. Visa offers a suite of network products that can help automate this process using real-time cardholder verification and token management including:
- Payment Account & Status Validation: Confirms the account is active before authorization.
- Name & Identity Verification (ANI): Matches checkout names with issuer records.
- Address Verification (AVS): Cross-checks billing addresses against cardholder records held by issuers.
- Card Verification Value (CVV2): Verifies the security code on the card.
- Age & Attribute Verifications: Checks customer attributes during onboarding.
Token Management Service (TMS) also secures payment details by providing:
- Unified Token Vault: Consolidates customer and card details across networks (Visa, Mastercard, Amex, JCB) into single tokens.
- Omnichannel & Alternative Payment Support: Extends tokenization to methods like ACH and eChecks to reduce PCI compliance scope.
These background checks help identify risky transactions, increase approval rates and maintain a fast checkout experience.
How can merchants balance fraud prevention with seamless payments?
Ultimately, securing modern checkouts is about applying security solutions that are purpose built for minimal friction, rather than trying to eliminate it all together.
By using risk-based authentication methods, merchants can typically process more than 98% of valid purchases while saving additional verification steps for high-risk transactions, according to VisaNet data.
With fast, automated decisioning, you can keep your checkout moving smoothly and more quickly without exposing yourself to fraud.
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