What We Can Learn from the Unique Payment and Fraud Trends in Asia-Pacific
Even as our global economy becomes more connected, it’s far from a monolith. Distinct geographic regions and markets have unique economic indicators, and these differences are highlighted when examining payments and fraud trends in those regions.
Though trends may move in similar directions on a macro scale (such as a global increase in eCommerce and a corresponding increase in fraud activity during the COVID-19 pandemic), an examination of specific payments and fraud Key Performance Indicators (KPIs) through a regional lens provides compelling insights into a region’s overall economic status and the health of its eCommerce markets.
Applying this data-driven investigative framework to the Asia-Pacific (APAC) region paints a particularly compelling picture of a vibrant market filled with exciting opportunities and unique challenges.
In this exploration of the unique payment and fraud prevention trends in APAC, we’ll be using data pulled from 2022 Global Payments and Fraud Survey, produced by the MRC, Cybersource, and Verifi. This report provides critical benchmarks for the payments and fraud prevention industries compiled with information sourced from global merchant respondents, many of which operate in the APAC region.
The Evolution of Payments in APAC
Analyzing the payment methods consumers are using is a critical metric for regional merchants. Knowing how customers want to pay and offering them that option is key to succeeding in specific markets.
In line with that strategy, APAC-based merchants actively expanded the number of payment methods they offered to customers in 2021. At the time the survey was conducted (November-December 2021) 3.9 was the average number of payment methods offered by responding merchants in APAC, with 2.6 being the average number added over the previous year.
This remarkable increase in the number of payment methods offered clearly demonstrates this market is enthusiastic about new ways to pay. It also indicates that merchants are rapidly adapting to these consumer demands; with the primary drivers for adopting these new payment methods being customer centricity, achieving growth goals, and expanding offerings to consumers to meet demand.
So what payment methods are customers excited about using? According to the survey, third-party payments (such as BNPL or crypto), digital wallets, mobile commerce (mCommerce), and gift cards were the fastest growing payment methods used in APAC. This may provide insight into how consumer enthusiasm might dictate payment offerings in the region in the coming years.
The Changing Fraud Landscape
As the payments landscape continues to evolve, so too do the considerable efforts of fraudsters. Understanding regional fraud patterns is critical in getting a complete picture of the current eCommerce landscape in APAC.
According to the survey, the biggest fraud management challenges impacting merchants in APAC were identifying and responding to fraud attacks, shifting business models to adapt to the changes brought on by COVID-19, and expanding into new sales channels. These general concerns don’t appear to have changed dramatically since the year prior, but the attack vectors fraudsters utilized did shift.
In 2021 the top fraud attack vectors in APAC, in descending order, were phishing, identity theft, card testing, loyalty fraud, and coupon discount/refund abuse, loyalty fraud and coupon discount abuse were both down significantly when compared to the prior year.
Interestingly, first-party misuse (friendly fraud) was a less commonly cited concern than in other regions. It was not among the top five fraud threats in APAC in 2021, unlike in North America, Europe, and Latin America.
Overall, APAC’s fraud metrics painted an optimistic picture, at least when compared to the year before. Merchants in the region saw significant declines in most fraud KPIs tracked by the survey, after a prior year of ranking ahead of other markets in many fraud metrics. This essentially brings APAC in line with other regions instead of being an outlier, a clear move in the right direction.
Part of that positive shift could be attributed to the tools and fraud mitigation strategies merchants used to fight back against fraudsters in 2021. The top five in the region, again in descending order, were two factor authentication (2FA), identity validation/verification tools, payment card verification services, 3DS, and biometric verification.
Security and privacy were clearly a priority for merchants in APAC in 2021. According to the survey, 70% of merchant respondents in the APAC region utilized tokenization to improve payment security, customer privacy, and to reduce the risk of data breaches.
These are just some of the relevant data, analytics, and content available for the APAC region and beyond in the MRC’s 2022 Global Payments and Fraud Survey. The full report also touches on additional metrics like percentage of revenue lost to payment fraud, regional fraud mitigation cost changes, the role of manual review in fraud strategy, and more.
The Power of Cooperation
Benchmarking an organization’s performance and comparing those results to others in the same region and vertical is critical for ensuring that organization remains competitive. The 2022 Global Payments and Fraud Survey can help provide a wide view of global and regional patterns, but it’s difficult to replace in-person discussion and the efficacy of sharing of ideas on an industry level.
Dedicated payments and fraud prevention events, like the MRC Singapore 2022 conference, are the ideal environment to establish these important connections. There’s no better place to learn the latest developments than a conference focused on a specific market, no better place to meet like-minded professionals facing similar obstacles, and no better way to find solutions that can benefit everyone in eCommerce.
Author: Leo Perill, Merchant Risk Council.
This article has been republished with permission from merchantriskcouncil.org.
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