E-Commerce Will Flourish This Holiday Season, But Watch Out for Fraud, ACI Warns

The economy may have fallen into recession, but processors and online stores can expect a healthy holiday season this year, according to projections released Thursday by ACI Worldwide Inc. The Naples, Fla.-based payments provider said e-commerce transactions will jump 27% globally in the fourth quarter compared to the same period last year as consumers continue to rely on online commerce during the pandemic.

The projection is based on trends in “hundreds of millions” of online transactions ACI has seen in recent months from global merchants, the company said.

The buy-online, pick-up-in-store (BOPIS) phenomenon is also set for a big jump this holiday season, if ACI’s projections are accurate. The processor predicts a 40% increase in these transactions for the holiday quarter. “As consumers spend more time at home, we expect BOPIS to be the primary delivery channel that consumers use to do their holiday shopping this year,” said Debbie Guerra, executive vice president at ACI, in a statement. The company will not provide raw numbers or values, a spokesman says.

Much of the rising expectation for the holiday quarter rests on observed consumer behavior during the pandemic. “We see consumers beginning their shopping in early October as a result of concerns over inventory shortages as well as shipment delays, but also because merchants are providing sales and deals earlier in the year,” Guerra added.

Last month, e-commerce transaction volume handled by ACI grew 21% year-over-year. While gaming (up 71%) and general retail (a 45% jump) gained the most in September, travel (down 21%) and ticketing (a 75% plunge) were the biggest losers.

But online fraud is also on the rise, with ACI reporting a $9 increase in the average ticket price for fraud attempts for the first nine months of the year compared to the same period in 2019, caused mostly by a surge in electronics sales.

Indeed, while convenient for legitimate customers, BOPIS has proven to be “the channel of choice” for fraudsters, particularly when it comes to electronics products. “We expect the BOPIS delivery channel to grow for both genuine and fraudulent consumers as merchants both large and small continue to add this as a new option due to the pandemic,” Guerra said. 

She warns that merchants will have to be particularly watchful for online fraud during the holiday season, which is starting weeks earlier this year. “The accelerated use of digital payment channels due to the pandemic has resulted in both cross-channel journeys such as BOPIS as well as the blurring of the channels themselves, such as the usage of mobile devices and mobile checkout inside physical stores,” she says. “This digital swing has opened a way to expand merchants’ market reach by enhancing the buying journey experience. but it also means more exposure to fraud.”