Adyen Finds One-Third of Businesses are Victims of Fraud

Adyen has published new research revealing that 35% of retail businesses in the UK have been a victim of a cyberattack or data leak in the last year alone

In partnership with the Centre for Economic Business and Research (Cebr), the global financial technology platform found that the retail sector lost £11.3bn (US$14bn) to fraud in 2023. Retail businesses in particular lost an average of  £1,394,518 (US$1,737,945.95) each to fraudulent activity over the last twelve months.

Research also finds that the average amount lost per shopper is £311.09 (US$387.59), which is a percentage increase of 16%.

During a time where cyber threats are becoming increasingly concerning within the financial sector, businesses are having to find new and improved ways to protect their customer base and their operations from suffering a breach.

Tackling fraudulent attacks with new technologies

On average, Adyen found that businesses lost roughly £1.4m (US$1.74m) to fraudulent attacks. Likewise, luxury fashion retailers lost £2.8m (US$3.4m), clothing and accessory businesses £2.6m (US$3.23m) and health and beauty brands £1.1m (US$1.36m) each.

Research also found that cyberattacks and data threats to businesses have increased by 37%, in comparison to 2022. In fact, businesses who predicted that their revenues would grow by 50-100% more in 2024 actually lost the highest amount to fraudulent attacks within the last year.

Adyen warns that fast enterprises that encounter fast growth must have the right technologies in place to protect the business and its customers.

Whilst fraud is a pervasive challenge for retailers, AI and machine learning technology could offer a solution. As Roelant Prins, CCO at Adyen, explains, the company’s findings highlight how it can significantly impact profits.

“Criminals are deploying more sophisticated methods when they attack businesses, including the application of AI, and it’s therefore critical to invest in the right defence mechanisms to protect the company and customers,” he says.

Roelant Prins, CCO at Adyen

“There’s no single solution to fraud defence, as a strategy will need to be tailored based on the business model and platforms used to make sales. With technology in place, such as machine learning tools, retailers should be able to recognise genuine customers and spot fraudulent activity across their sales channels.”

He adds: “Machine learning can help to analyse global data sets and therefore keep on top of new fraudulent activity, ensuring the business is protected in real-time. We use advanced technology combined with customisable risk rules to protect retailers and their customers – blocking fraud, preventing disputes and staying ahead of the latest fraud trends.”

Businesses ‘must respond’ to growing threats of fraud

The risk of fraud has impacted consumer shopping behaviour both in-store and online. Adyen notes that 26% of consumers now feel more unsafe when shopping today compared to 10 years ago, due to the increased risk of payment fraud.

As a result, 16% of consumers actively choose to shop at stores with higher security measures. Likewise, when shopping online, 23% of consumers like it when retailers ask them to verify their identity in at least two different ways before making a purchase.

However, despite such an increase in fraudulent activity, Adyen’s research highlights that only two-thirds of businesses (63%) currently have effective fraud prevention systems in place. This is an increase of 10 percentage points since last year (53%).

In response, they are now exploring new ways to respond to growing fraud threats to better protect themselves and their customers. In fact, Adyen notes that more than half (47%) have actively considered changing their payments provider to one that can offer improved fraud defence mechanisms.

Additionally, 46% have started considering how their business can be compliant with Payment Services Directive 3 (PSD3) – an EU directive setting out stricter rules for protecting consumers’ rights and personal information in the finance industry.

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