Ecommerce is losing money to fraud – and looking towards biometrics

Fraud losses continue to plague ecommerce and online payments, with Juniper releasing the latest sobering statistics on merchant losses. Behavioral biometrics are identified as a trend for 2025 to help stem the tide, and Mastercard is enabling existing bank authentication methods including biometrics to be used with more merchants through Open Banking and Unzer’s payment gateway. The UK’s new payments strategy brings together Open Banking with strong customer authentication and digital identity to tamp down on fraud.

eCommerce turns to behavioral biometrics after $48B in losses

Online merchants have historically avoided introducing stricter KYC requirements, fearing that the friction will discourage customers. But online fraud is rising. In 2023, global e-commerce merchants lost more than US$48 billion to fraud, a 16 percent rise compared to the previous year, according to data from Juniper Research.

A key technology to preventing fraud is biometric verification, especially facial recognition. E-commerce platforms should use biometric verification in combination with eID documents, the company says in its Fraud Prevention in E-commerce Report 2024-2025.

Juniper Research also predicts that 2025 will see “dramatic shifts” in fintech and payments.

While one of the most common forms of biometric authentication is currently facial biometrics, the research firm predicts that next year will see a wider deployment of behavioral biometrics. As a form of passive ID verification, it enables businesses to track user behavior allowing for ongoing authentication.

Another change that we might see in 2025 is developing AI for automating and improving fraud prevention and identity verification.

“We expect AI to be used at a more network and systemic level than ever before in 2025 within fraud, analyzing transactions in a channel-agnostic way and detecting patterns before major losses mount,” the company says in its Top 10 Fintech and Payment Trends paper.

Last but not least, regulators may force Apple to open its NFC payment ecosystem, meaning that digital wallets such as those from Samsung or Google could potentially be adopted for iPhones.

Mastercard eases Unzer ecommerce payments

Berlin-based payments company Unzer will rely on Mastercard’s Open Banking-driven solutions to offer ecommerce payments across Unzer’s payment gateways in Germany, Austria and Denmark.

Mastercard’s Open Banking allows any bank account holder to make fast digital payments directly to a merchant. The transactions are performed through existing bank authentication processes, including biometric verification. The payments giant has recently announced its plan to transform online shopping by 2030, using a combination of secure transaction tokenization and biometric authentication.

Unzer offers online purchasing and in-store mobile POS systems for more than 85,000 merchants across Europe.

UK payments strategy focuses on digital fraud fixes

The UK government has published a National Payments Vision in a bid to “cut through the current regulatory congestion” and boost its payments infrastructure. Open banking, digital IDs and fighting fraud are among the highlights of the document, published in November.

The UK wants to be a world leader in Open Finance which is why establishing a commercial model is critical for its development. Open Banking-enabled account-to-account payments for ecommerce will become a strategic short to medium-term priority.

Many sectors would also benefit from a digital identity, the document states. The Data (Use and Access) Bill will create a basis for digital verification services without creating a mandatory digital ID system.

Finally, to improve fraud fighting, the government is planning a revocation of the payment authentication regulations relating to strong customer authentication (SCA) in the Payment Services Regulations 2017, which requires biometrics. This will enable the Financial Conduct Authority (FCA) to incorporate aspects of the technical standards into its rules, allowing more flexibility for fraud prevention.

The National Payments Vision is a response to the Future of Payments Review 2023, led by Joe Garner. To achieve its vision, the government is establishing a Payments Vision Delivery Committee, a senior cross-authority group, chaired by the Treasury.

Article Topics

behavioral biometrics  |  biometric payments  |  biometrics  |  digital payments  |  ecommerce  |  fraud prevention  |  Juniper Research  |  Mastercard