Approximately 1.9 billion purchases per year – representing $145.9 billion in sales – are declined around the world, many of which are ‘false declines’, according to research from payments technology firm Ethoca.

A ‘false decline’ occurs when fraud detection systems – whether at the card issuer, merchant or at other points in the value chain – reject a good transaction due to the suspicion of fraud. This happens because parties with a stake in the transaction are experiencing growing fraud losses and increasingly high costs to recover them.

According to the data 52 per cent of the orders that merchants thought were fraud, turned out to be good orders they could have successfully fulfilled. For both card issuers and merchants, this problem adds up to a multi-billion dollar lost opportunity. The research showed that a significant percentage of customers will abandon a purchase altogether, resulting in lost sales to merchants and lost transaction income to card issuers.

Keith Briscoe, chief product and marketing officer at Ethoca, commented: “There is little doubt the payments industry is looking at the increasing CNP (card not present) fraud problem through a different lens – and what we’re seeing is alarming.”

Share Story: