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omni-channel fraud big problem for retailers

54 per cent of retailers in Europe and the US still have to consolidate their fraud management solutions across all channels, according to new commissioned research conducted by Forrester Consulting for ACI Worldwide (NASDAQ: ACIW) and published in a report titled, Managing Fraud in an Omni-Channel World.

The research reveals that omni-channel data aggregation, the increasing number of payment options, the demand for faster fulfilment and the rapidly changing nature of fraud all present significant challenges to retailers’ fraud management programs.

Omni-channel retail sales are predicted to reach €920 billion (£660 billion) in Europe, or 44 per cent of total European sales, by 2018, with sales in the US predicted to hit $1.8 trillion (£1.1 trillion) by 2017. As more consumers engage with retailers through multiple channels—with an ever-increasing range of payment methods and devices—retailers are faced with added challenges, including heightened exposure to fraud risk and increased complexity for fraud management.

“We are seeing an increase in cross-channel fraud that highlights the importance of having a cohesive omni-channel fraud strategy touching all sales channels. The survey shows that 60 per cent of merchants believe they know what they need to do to combat fraudulent activity, but far fewer believe they have the tools to enable them to do this successfully,” said Jackie Barwell, Director of Fraud Product Management, ACI Worldwide. “The lack of adequate fraud management tools and skilled staff revealed in this survey is a real concern. Retailers need a combination of fraud rules and analytics that add speed and sophistication to fraud detection, and they need access to global fraud intelligence that can help them interpret and respond to fast changing patterns of fraud.”

The study also shows a mismatch between fraud trends and retailers’ ability to tackle new forms of fraud. For example, Card Not Present (CNP) transactions worldwide are growing at an annual rate of 15 per cent, and will reach more than 27 billion (transactions) by 2018. By comparison, card-present (CP) transactions are expected to grow less than 5 per cent (4 per cent) during the same time period. However, less than half of retailers surveyed say they use real-time rules and neural models for the protection of their CNP channels, while almost two-thirds say they use such tools for their CP channels.

Apart from sophisticated tools and the shortage of adequately skilled staff, respondents also believe that lack of funding (60 per cent) and executive sponsorship (63 per cent) limit their ability to perform effective omni-channel fraud management.

“It is clear from our study that many retailers feel unprepared to face the fraud challenges of an omni-channel world,” said Barwell. “There is a need for strategic and organizational changes, and an integrated approach to creating a true omni-channel environment for payments and fraud management.”

To download a complimentary copy of the research report, please click here or visit:

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