According to the Market Statsville Group (MSG), the global e-commerce fraud prevention market size is expected to grow from USD 38,714.0 million in 2022 to USD 303,870.4 million by 2033, growing at a CAGR of 20.6% from 2023 to 2033
With the increasing use of online shopping, there has been a corresponding increase in online fraud attempts has created a need for fraud prevention solutions to protect e-commerce businesses and their customers. The growing adoption of cloud-based solutions has also been a driving factor in the growth of the e-commerce fraud prevention market. Cloud-based solutions are cost-effective and easy to deploy, making them an attractive option for e-commerce businesses. As a result, more and more businesses are adopting cloud-based fraud prevention solutions to protect themselves and their customers from fraud. The emergence of artificial intelligence and machine learning is also an opportunity factor for the e-commerce fraud prevention market. Another opportunity factor is the growing demand for real-time fraud detection. With the rise in online fraud attempts, there is a growing demand for real-time fraud detection solutions that can detect fraudulent activities in real-time. This presents an opportunity for e-commerce fraud prevention solution providers to develop and offer real-time fraud detection solutions that can address this need.
E-commerce fraud prevention refers to measures and techniques designed to detect, prevent, and mitigate fraudulent activities in online transactions. With the rise of e-commerce, the risk of fraud has also increased, making it essential for businesses to implement fraud prevention strategies to protect themselves and their customers. E-commerce fraud can take many forms, including identity theft, account takeover, payment fraud, and friendly fraud. Fraudulent activities can result in financial losses, reputational damage, and legal consequences for e-commerce businesses. E-commerce fraud prevention solutions help businesses identify and mitigate these risks by implementing security measures such as fraud detection tools, identity verification processes, and transaction monitoring systems. Effective e-commerce fraud prevention involves a multi-layered approach that incorporates advanced technologies, human expertise, and best practices to stay ahead of fraudsters. As the e-commerce industry continues to grow, e-commerce fraud prevention will remain a critical aspect of online transactions to ensure secure and trustworthy online shopping experiences for businesses and consumers.
The pandemic has caused a surge in online shopping as consumers have shifted to digital channels to purchase goods and services. This increased volume of online transactions has also led to increased fraudulent activities, making e-commerce fraud prevention more critical than ever. One of the primary impacts of COVID-19 on the e-commerce fraud prevention market is the increased demand for fraud prevention solutions. With more transactions occurring online, the risk of fraud has also increased. As a result, e-commerce businesses are investing in fraud prevention solutions for themselves and their customers from potential fraud. The pandemic has also led to changes in consumer behaviour, with more consumers opting for contactless payments and other digital payments. This has created new opportunities for fraudsters to exploit vulnerabilities in digital payment systems, leading to an increased need for fraud prevention solutions. Additionally, the pandemic has created new challenges for e-commerce businesses verifying customer identities. With more customers shopping online, businesses face challenges verifying customer identities and preventing fraudulent account creation. This has led to increased adoption of identity verification solutions and other fraud prevention technologies.
The rapid adoption of cashless payment modes is anticipated to create significant growth prospects for the e-commerce fraud prevention market, considering the global scenario. Further, the introduction of cashless payment modes such as debit & credit cards, NEFT or RTGS, UPI apps, and more, has made digital payments convenient and safe. According to the World Payment Report study, the world's non-cash transactions surged almost 14% from 2018–2019 to reach 708.5 billion transactions, the highest growth rate reported in the past decade. Also, the Asia-Pacific surpassed North America and Europe to become the global leader in terms of non-cash transactions in 2019, with a volume of almost 243.6 billion. Thus, it has forced various banking, authorities, and financial institutions to incorporate BaaS platforms and solutions along with fraud and prevention solutions. It enables them to share data with third-party partners and developers like FinTech. These partners can then advance valued service offerings, such as including peer-to-peer lending solutions and mobile payment applications, which, in turn, expand the scope for the e-commerce fraud prevention market.
Furthermore, regional government efforts to increase financial inclusion and increase the adoption of mobile payments have boosted the adoption of cashless transactions in developing markets such as Asia (25.2%) and Central Europe, the Middle East and Africa (17.1%), which is estimated around 16.5% growth rate as per World Payment Report. Also, various government organizations and agencies are taking initiatives towards developing the required infrastructure and regulatory framework to enable more convenient and safer digital money transfers. An instance of a government initiative that promotes the growth of e-commerce fraud prevention is the digital India program. Launched by the Government of India, the program aims to transform the country into a digitally empowered society and knowledge economy. One of the key objectives of the program is to make digital payments convenient, easy, affordable, and secure for all citizens of India. By promoting the adoption of digital payments, the program helps to boost the growth of e-commerce fraud prevention in India, as businesses and consumers increasingly rely on secure online transactions.
Dearth of professionals and a skilled workforce to update the FDP solutions across emerging countries is expected to hamper the growth of the market. Corporations use servers to store crucial records and documentation about their customers' data. As a result, protecting and securing documents is critical for businesses to avoid money laundering. The e-commers FDP systems are expected to be tested and updated occasionally by advanced cyber-attacks and novel anonymous threats. Another market constraint for expansion is a lack of acceptability and reactivity in emerging countries in the Middle East and Africa, Asia-Pacific, Latin America, and the Caribbean, such as Mexico, Argentina, Chile, Peru, and Colombia.
Moreover, The security risks related to online banking services are high due to various technological and other reasons. Data security and privacy concerns arise from the worst data practices in digital banking. From a privacy viewpoint, the corrupt practices include sharing, unchecked data brokerage, non-consensual or extreme data collection, storage, and failure to de-identify data. Whereas from a security standpoint, corrupt practices involve poor mechanical control, use of weak encryption, centralized data storage, and poor cyber intellect. Apart from this, the negative impact of corrupt practices on the consumer is further harmed by identity theft, data breaches, reputational damage, actual loss, and discrimination. This factor poses a significant risk to the operators and may pose a data security & privacy concern, which is one of the major factors that limit the market growth of e-commerce fraud prevention market in the global scenario during the forecast period.
Cloud adoption has occurred in various technological sectors and is now being applied to services. One of the major developments is using the cloud for fraud detection and prevention. It gives internet access and has sufficient computing power and storage space to enable rapid tracing of online cyber-attacks. Furthermore, small and medium firms in financial institutions are adopting cloud-based fraud detection and prevention services. For example, ACI Worldwide, Inc. completed collaborations with Salesforce.Com Inc. in November 2019. The partnership was signed to integrate the company's real-time fraud protection technology with the Salesforce commerce cloud. Machine learning, predictive analytics, customer profiling approaches, and other capabilities are included in the integration. The cloud-based technology aids customers in reducing the risk of fraud while allowing for genuine payments and transactions. The internet of things (IoT), big data, cloud computing, and blockchain technology are some of the other important technologies boosting demand for fraud protection solutions.
The study categorizes the e-commerce fraud prevention market based on fraud type, organization size and industry area at the regional and global levels.
Based on the type, the market is divided into a card testing, credit card fraud, friendly fraud, identity theft, merchant fraud, phishing, and refund fraud. Credit card fraud is expected to dominate the market share in 2022 in the global e-commerce fraud prevention market. Credit card fraud is a type of fraud where fraudsters use stolen credit card information to make unauthorized transactions. It is a significant threat to e-commerce businesses and their customers, as it can result in significant financial losses and reputational damage. E-commerce fraud prevention solutions use various technologies and techniques, such as machine learning, artificial intelligence, and behavioural analytics, to detect and prevent credit card fraud. These solutions also incorporate other fraud prevention strategies, such as identity verification and transaction monitoring, to provide a multi-layered approach to fraud prevention.
Based on the regions, the global e-commerce fraud prevention market has been segmented across Europe, North America, the Middle East & Africa, Asia-Pacific, and South America. North America is projected to account for the highest market share in 2022. North America has a mature e-commerce industry with well-established e-commerce businesses and high consumer trust in online transactions. However, this also makes North America an attractive target for fraudsters looking to exploit vulnerabilities in the e-commerce system. To counter these threats, e-commerce businesses in North America are investing heavily in fraud prevention solutions to protect themselves and their customers. The region has also seen the development of advanced fraud prevention technologies and solutions, such as machine learning, artificial intelligence, and biometrics, to detect and prevent fraud in real time.
The e-commerce fraud prevention market is a significant competitor, and extremely cutthroat in the sector are using strategies including product launches, partnerships, acquisitions, agreements, and growth to enhance their market positions. Most sector businesses focus on increasing their operations worldwide and cultivating long-lasting partnerships.
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