Merchant Survey Highlights Surprising Global Trends in Payments and Fraud

By Tracy Kobeda Brown – VP of Programs and Technology and Leo Parrill – Content Manager, MRC

The annual Global Payments and Fraud Report, produced in collaboration with Cybersource, Verifi, and the Merchant Risk Council, serves as a valuable benchmark in the payments and fraud prevention space, providing insight into emerging patterns and the latest industry trends. The 2022 survey report highlights several fascinating developments from the last year as the eCommerce industry continues to manage the impacts of COVID-19.

This most recent survey was conducted in late 2021, with a diverse mix of 1,060 enterprise merchants, mid-market, and small businesses, from

North America, Europe, APAC, and LATAM providing responses.

According to data from the report, fraud costs increased for a second consecutive year on a global scale, but most participating merchants did not increase the share of revenue they dedicated to fraud management. Only North American merchants reallocated revenue to fraud mitigation, likely because they reported increased levels of new fraud when compared to those in other regions.

Fraud management strategies also shifted in 2021, with more merchants prioritizing addressing chargebacks and fraud over optimizing the customer experience. This is likely due to the uptick in associated fraud costs, and the fact that customer experience was a particularly high priority during the first year of the pandemic.

The types of fraud most commonly encountered by merchants also shifted from the previous year’s (2020) survey results, with phishing, card testing, identity theft, and first-party misuse (friendly fraud) now being the most prolific.

Moving from fraud to payments, merchants operating in Europe are generally adapting well to the European Commission’s Payment Services Directive (PSD2), and the Strong Customer Authentication/EMV® 3DS component of that directive. More than half of the merchants asked responded that they feel confident in their current level of preparation.

When it comes to payment authorization optimization, merchants continue to experiment with different strategies. EMV® 3DS, intelligent routing, machine learning, and automated retries were the most frequently reported. This highlights that payment optimization continues to be a priority for merchants, even during turbulent, uncertain times, and even when experiencing increased fraud volume.

Third party and alternative payments are also increasing in volume, with buy now, pay later (BNPL), digital wallets, and mobile payments being the leaders in terms of acceptance among participating merchants. This drive toward accepting alternative payments appears to be motivated primarily by a desire to improve customer experience, but also to appeal to new customer segments and broader markets.

It is recommended to read the full Global Payments and Fraud Report for additional insights and context, but even the limited data presented here makes it clear 2021 brought significant shifts in payment and fraud-related strategy for merchants everywhere.

Increased fraud volume forced merchants to respond by reprioritizing focus to compensate, while the enthusiastic adoption of third-party payment options and new payment optimization strategies show that merchants are continuing to expand their offerings and aren’t afraid of finding new ways to grow, even in the face of uncertainty.