A report by lobal data and analytics company LexisNexis® Risk Solutions found that Australia, Hong Kong, Japan and India recorded higher losses per transaction due to fraud compared to its Asia Pacific (APAC) counterparts.
It showed that the cost per transaction is US$3.51 in Australia; US$3.61 in Hong Kong, US$3.87 in Japan and US$3.84 in India, the total amount of loss a firm occurs based on the actual U.S. dollar value of a fraudulent transaction.
All four countries reported higher costs per transaction than the regional 2019 average that involved other APAC markets at US$3.40.
A combination of factors is driving the high cost of fraud, including market events influencing the use of transaction channels/payment methods, the challenges that businesses face when assessing fraud.
Another factor is the less than optimal approach that businesses take towards fraud detection, prevention and minimising customer friction.
The report also found that financial institutions tend to have higher costs given the heavy account-based nature of their business and the need to repay fraud losses to customer accounts, financial institutions often employ more internal and external labor for investigation, detection and recovery.
On average they spend US$3.78 per transaction in Australia, US$4.70 in Hong Kong, US$4.46 in Japan and US$4.76 in India.
One of the other key findings in the report is that identity verification remains a top challenge. The rise of synthetic identities was the most common source of identity verification issues.
Additionally, the use of digital/passive identity authentication solutions and transaction risk assessment solutions was limited in the Australia and Hong Kong markets.
The 2021 True Cost of Fraud™ APAC Study covers the retail, ecommerce, financial services and lending sectors for Australia, Hong Kong, India and Japan.
The report’s findings stem from a comprehensive survey of 418 risk and fraud executives in retail, ecommerce, financial services and lending companies in the APAC region in 2021.
Cameron Church
Cameron Church, Director of Fraud and Identity, LexisNexis Risk Solutions said,
“High fraud costs impact ecommerce merchants, retailers and financial institutions as they increase each year – even without the influence of COVID-19.
With sophisticated threats on the rise, taking a multi-layered solution approach has proven to be the most effective way to fight fraud across various channels and transaction types, as well as performing a more complete assessment that combines physical and digital identity data analysis.”
Featured image: edited from Unsplash here and here
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