MRC 2017 Global Payments Survey

Presented by Úna Dillon, Managing Director MRC Europe

At the Adigital Conference 30th March 2017, Madrid

Introducing the MRC

• The Merchant Risk Council (MRC) is the principal not for profit

global forum for ecommerce fraud and payment professionals

• Our Vision:- Making commerce safe and profitable everywhere

• The MRC provides proprietary education and training as well as

a forum for relevant discussions

Our Members

• Multi-channel and e-commerce merchants

– Merchants representing 95% of the top 20 ecommerce companies in the world.

– Over 82% of the top 50

– 60% of the top 100

• Card Schemes (Discover, Visa, MasterCard, AMEX)

• The top 20 payment processors

• The top 5 alternative payment processors

• Top 20 Risk Management Providers

• Payment Card Issuers

• Law Enforcement Agencies

A Sample of our Membership

2017 Global Fraud Survey

Sponsored by CyberSource

7%6%

27%61%

2%

Sample Demographics

<$5M

$5M –$25M

31%

6%51%

7%6%

OtherServicesTravel

Services

PhysicalGoods

Digital Goods

Subscription Services

Type of goods and services sold Annual online revenue

MRC Merchants MRC Merchants

$100M+ $25M–$100M

<$5M$5M–$25M

MRC Merchants Expanding Global Presence

North America

5%

6%

25%

10%

15%

12%

8%

31%

34%

45%

42%

82%

Japan

China

Australia

Brazil

Mexico

Italy

Spain

France

Germany

United…

Canada

United States

Mentioned as Top 5 eCommerce Markets

Europe

South / Central America

Asia Pacific

eCommerce Fraud Loss Varies by Country

n=23 n=26 n=19 n=14n=12 n=16

0,5% 0,5%0,6% 0,6%

1,0%

1,3%

1,5%

1,9%

United States Canada Germany United Kingdom France Australia Brazil Mexico

eCommerce fraud loss rate is defined as fraud-coded chargebacks plus credits issued in response to fraud complaints.

eCommerce Fraud Loss Rate – by Country

Order Reject Rate by Country

n=23 n=26 n=19 n=14n=12 n=162,7% 2,7% 2,8% 2,4%

3,9%2,9%

4,6%

14,3%

United States Canada Germany United Kingdom France Australia Brazil Mexico

Order rejection is defined as transaction the merchant decides to reject (automatically or manually) due to suspicion of fraud.

Order Reject Rate – by Country

MRC Merchants Attain Lower Fraud Losses

eCommerce fraud loss rate is defined as fraud-coded chargebacks plus credits issued in response to fraud complaints.

0.6%

1.1%

0.5%

0.7%

MRC Non-MRC

2014 2016 2014 2016

eCommerce Fraud Loss Rate

North America

Manual Review Rate is comparable

Manual screening is defined as those orders that are not processed or delivered automatically and go through a manual / back office analysis to determine if they should be accepted or rejected.

12%

15%

8% 8%

MRC Non-MRC

Manual Review Rate

2014 2016 2014 2016

MRC Merchants Focus on Core KPIs

9%

13%

5%

9%

14%

14%

18%

20%

33%

36%

55%

58%

6%

7%

10%

8%

15%

31%

14%

24%

30%

46%

77%

Order authentication rate

Friendly fraud rate

Manual review rate – transaction …

Rate of refunds issued

False positive

Manual review rate – transaction count

Chargeback rate on maunual review

Order rejection rate

Fraud rate – by order volume

Confirmed fraud rate

Fraud rate – by value

Chargeback rate

MRC Non-MRC

Percent of Merchants Selectingas One of Their Top 3 Fraud KPIs

Fraud Function Organisation Accountability

32%28%

9%12%

19%

41%

25%

7%

15%

7%

Finance Operations IT / Technology Customer Service Dedicated Team

MRC Non-MRC

Department Responsible for Fraud Management

Major Fraud Management Challenges

10%

14%

18%

22%

22%

27%

32%

41%

46%

Keeping up to date on government regulations orrule changes by payment systems / card networks

International expansion

Lack of internal expertise

Updating fraud risk models (e.g., score)

Tracking false positives

Tracking friendly fraud

Identifying / responding to emerging fraud attacks

Gaps in fraud tool functionalities

Lack of sufficient internal resources

Merchant Improvement Priorities

Total n = 403

51%

45%

34%31%

16%

10%7%

Improvingautomated

detection accuracy

Improving fraudanalytics

Streamling manualreview

tasks and workflow

Improvingchargeback

dispute process

Don’t know Create mobile-specific

fraud rules

Better managingomni-channel fraud

Priorities for improvementOther Priorities• Reducing fraud prevention total cost

• Improved fraud vendors

• Detecting friendly fraud

• Increase awareness on fraud

• Focus on obtaining true SME talent

• Reducing false rejects

MRC Merchants Are Winning Against Fraud

Key takeaways

• MRC members reported 29% lower revenue loss due to fraud

• Lower order reject rate implies better order conversion

0.5%

0.7%

MRC Non-MRC

Fraud Loss Rate

2.6%

3.1%

MRC Non-MRC

Order Reject Rate

THANK YOU

Phone

+353 (0)87 204 7579

MRC Fraud & Payments EU Ltd.

Suite 403,

1/3 Burton Hall Park,

Burton Hall Road,

Sandyford,

Dublin 18, Ireland

email

una@merchantriskcouncil.org

Contact the MRC