One of the top issues for most finance executives is cybersecurity. With cyberattacks multiplying and the EMV liability shift moving more fraud to online channels, management is expected to assume larger roles in assessing risks and developing measures to prevent security breaches while preserving and protecting revenue streams.
For management working in organizations with an e-commerce channels, this concern is critical. With e-commerce already representing more than 8.1% of all retail sales, these leaders must focus on reducing the complexity and mitigating the growing risks of e-commerce fraud while continuing to drive revenues. Forrester Research predicts that e-commerce sales will grow at a 10% compounded annual rate over the next five years to $480 billion, or nearly 3% of the U.S. GDP, and such transactions are expected to scale in tandem.
Management needs to understand the impact that soaring levels of online fraud will have on their companies bottom lines. Merchants with an online channel are already losing 7.6% of their annual revenue to fraud.
Risks are especially acute for e-commerce companies, which are increasingly dealing
with fraudulent transactions in card-not-present (CNP) sales. E-commerce merchants dealing exclusively in digital goods, such as electronic tickets, downloads, and gift cards, are suffering the worst hits, losing 8.6% of revenue on average to fraud and related costs. Hybrid goods merchants ... selling both physical and digital goods ... are facing similar losses at 8.1% of revenue.
Today, 41% of merchants hire and train in-house personnel to identify, respond to and resolve fraud situations. Javelin found that these staffing costs account for 36 to 41 % of all fraud and chargeback-related expenses for merchants across all segments. Costs are even higher for digital goods merchants. They employ nearly 5 times the fraud prevention personnel as physical goods merchants.
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