The worldwide financial technology platform discovered, in collaboration with the Centre for Economic Business and Research (Cebr), that fraud cost the retail industry £11.3 billion (US$14 billion) in 2023. Over the past 12 months, fraud has cost retail enterprises in particular an average of £1,394,518 (US$1,737,945.95) apiece.

Additionally, research reveals that the average amount lost by a consumer is £311.09 (US$387.59), representing a 16% rise.

Businesses need to develop new and better ways to prevent a breach in their operations and client base at a time when cyber attacks are becoming more and more of a problem for the financial industry.

Using innovative technology to combat fraudulent assaults

Adyen discovered that fraudulent assaults cost organizations, on average, £1.4 million (US$1.74 million). Similarly, clothes and accessory companies lost £2.6 million (US$3.23 million), luxury fashion stores lost £2.8 million (US$3.4 million), and health and beauty brands lost £1.1 million (US$1.36 million) apiece.

Additionally, research indicates that, compared to 2022, cyberattacks and data risks to enterprises have grown by 37%. In actuality, companies that projected a 50–100% increase in sales in 2024 actually suffered the greatest losses from fraud attempts in the previous year.

Adyen cautions that in order to safeguard both the company and its clients, quickly expanding businesses need to have the appropriate technology in place.

While fraud is a constant problem for merchants, artificial intelligence and machine learning technologies may be able to help. According to Adyen's CCO, Roelant Prins, the company's studies demonstrate how it may have a major effect on earnings.

He states, "Investing in the right defense mechanisms is critical to protect the company and customers as criminals are using more sophisticated methods to attack businesses, including the application of AI."

"There is no one-size-fits-all approach to fraud defense; instead, a customized plan must be developed depending on the platforms and business model being utilized. With machine learning capabilities and other technologies in place, merchants ought to be able to identify real consumers and identify fraudulent behavior throughout their sales channels.

"Global data sets can be analyzed with the aid of machine learning, enabling businesses to stay ahead of emerging fraudulent activity and maintain real-time protection," he continues. To safeguard merchants and their clients, we integrate cutting-edge technology with customizable risk rules to stop fraud, settle disputes, and stay ahead of emerging fraud trends.

Companies "must respond" to the increasing risks of fraud.

The possibility of fraud has affected how customers purchase, both online and in physical stores. Due to the higher danger of payment fraud, Adyen reports that 26% of customers feel more uncomfortable when purchasing now than they did ten years ago.

Consequently, 16% of customers consciously select to buy at establishments with more stringent security protocols. Similarly, while making purchases online, 23% of customers prefer it when merchants request that they authenticate their identity through two or more distinct channels.

Even still, Adyen's study shows that just 63% of organizations presently have efficient fraud protection measures in place, despite the rise in fraudulent activity. Compared to previous year (53%), there has been a 10 percentage point gain.

They are now investigating fresh approaches to counteract the increasing risks of fraud in order to better safeguard both their clients and themselves. Indeed, according to Adyen, 47% of respondents have really thought about switching to a payments provider that can provide better fraud defense systems.

Furthermore, 46% of companies have begun to think about how their operations may comply with Payment Services legislation 3 (PSD3), an EU legislation that lays out more stringent guidelines for safeguarding customers' rights and private data in the banking sector.