E-commerce digital transactions are rapidly increasing with global ecommerce sales forecast to grow to $7.89 trillion by 2028. While in-store shopping still earns more sales dollars than online shopping, consumers spent more than 18% of total average retail spend from e-commerce during the first half of 2025. Additionally, mobile technology and AI are major drivers of ecommerce growth, with mobile phones accounting for 77% of ecommerce website visits, and nearly 60% of U.S. shoppers turning to AI engines for help, even when online stores embed generative AI tools ton their websites. As a result, opportunities for fraudsters to exploit businesses and consumers for monetary gain are reaching high levels. Businesses must be aware of the risks associated with card not present (CNP) fraud and take steps to protect themselves and their customers.
What is card not present fraud?
CNP fraud occurs when a criminal uses a stolen or compromised credit card to make a purchase online, over the phone, or through some other means where the card is not physically present at the time of the transaction. This type of fraud can be particularly difficult to detect and prevent, as it relies on the use of stolen card information rather than the physical card itself.
CNP fraud can yield significant losses for businesses — these attacks are estimated to reach a staggering $28 billion in losses by 2026. Many have adopted various fraud prevention and identity resolution and verification tools to better manage risk and prevent fraud losses. Since much of the success or failure of e-commerce depends on how easy merchants make it for consumers to complete a transaction, incorporating CNP fraud prevention and identity verification tools in the checkout process should not come at the expense of completing transactions for legitimate customers.
What do we mean by that? Let’s look at false declines.
What is a false decline?
False declines occur when legitimate transactions are mistakenly declined due to the business’s fraud detection system incorrectly flagging the transaction as potentially fraudulent. This can not only be frustrating for cardholders, but also for merchants. Businesses may lose the sale and also be on the hook for any charges that result from the fraudulent activity. They can also result in damage to the business’s reputation with customers. In either case, it is important for businesses to have measures in place to mitigate the risks of both.
How can online businesses increase sales without compromising their fraud defense?
- One way to mitigate the risk of CNP fraud is to implement additional security measures at the time of transaction. This can include requiring additional verification information, such as a CVV code or a billing zip code to further authenticate the card holder’s identity. These measures can help to reduce the risk of CNP fraud by making it more difficult for fraudsters to complete a transaction.
- Machine learning algorithms can help analyze transaction data and identify patterns indicating fraudulent activity. These algorithms can be trained on historical data to learn what types of transactions are more likely to be fraudulent and then be used to flag potentially fraudulent transactions before it occurs.
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Businesses require data and technology that raise confidence in a shopper’s identity. Currently, the data merchants receive to approve transactions is fragmented, creating gaps in identity and payment ownership verification that allow fraudulent transactions to occur. A payment verification solution like Experian’s account ownership verification solution fills this gap by enabling online businesses to augment their real-time decisions with data that links customer identity to the credit card being presented for payment to help verify the legitimacy of a transaction. Using Experian’s signals, businesses can link names, addresses and other identity markers to the customer’s credit card. The additional data enables better decisions, increased sales, decreased costs, a better buyer experience and better fraud detection.
Get started with Experian’s frictionless payment card ownership verification solution.
