It is 2023 and e-commerce continues to boom—and it will only continue to grow. The Asia Pacific region (APAC) will be the epicentre of this growth.
Already, 64% of global e-commerce spending occurs in APAC, and that market share has been true for several years now. In fact, in 2021, e-commerce sales in the region were three times more as compared to North America and five times higher than in Europe. The future looks even brighter, with revenue in the e-commerce market forecast to reach a staggering USD $2.3 trillion by this year and USD $2.8 trillion by 2026—indicating a robust digital economy globally.
The forecasts here in APAC are just as bullish, with Modor Intelligence predicting a Compound Annual Growth Rate (CAGR) of 10.24% between 2022 to 2027. This robust growth can be attributed to widespread Internet penetration all across Asia, along with “the efficient, effective, and quick distribution of goods” that are encouraging customers in the region to leverage online shopping.
Expect that trend to continue given the continuing growth of e-commerce in Southeast Asia, where ecommerce sales in 2022 was projected to grow by 20.6%, which is the highest in the world. The region’s ecommerce market grew even more post-pandemic as Southeast Asian countries have accelerated their digital transformation—and strengthened their e-commerce infrastructure in the process. The forecasts are encouraging to this end, with Singapore, in particular, expected to have a CAGR of 16.23% from 2022 to 2025. That is mostly thanks to the number of online shoppers in Singapore reaching 4.1 million by 2025—not bad for a country with a population of slightly over 5 million only.
The rest of Southeast Asia, in fact, leads the world in terms of e-commerce growth, with Indonesia, for instance, emerging as the world’s largest market for online selling as sales reached USD $43.4 billion in 2021—up by 32% from 2020. Malaysia posted considerable growth in e-commerce as well, recording USD $6.3 billion in online sales in 2021, or 15% higher than in 2020. Online sales in the Philippines, Vietnam and Thailand are also in the billions, at USD $12 billion, $8 billion and $10.5 billion, respectively.
Unsurprisingly, digital payment is flourishing alongside the growth of e-commerce in the region. This trend is evident in the Philippines, where the preference for paying digitally has been growing steadily, so much that its government is now aiming for 50% digital payment adoption by the end of 2023. The same thing is happening in Singapore, where card payments have been the preferred mode of paying for online transactions since 2020, with 75% of online purchases being paid using either a debit or credit card. Card payments, as well as bank transfers, are also getting popular in Vietnam, with 35% of Vietnamese using the former and 26% preferring the latter. Bank transfer apps, meanwhile, are preferred in Malaysia, with 46% of Malaysians favouring them.
If there is one downside that comes from all the progress that the region is experiencing, it is that we can expect digital fraud to worsen and cost businesses considerable losses. Juniper Research predicts that merchants globally will lose more than USD $48 billion in 2023, or over USD $7 billion more than compared to 2022. That translates to a 16% increase year-on-year in losses, and Juniper attributes it to the rise of “risk-ridden alternative payment methods” that include digital wallets and buy-now-pay-later.
At the centre of it all is identity, which is intrinsically tied to payments in this digital age. This is why fraudsters are increasingly trying to either circumvent identity verification systems or steal identities outright. All this identity fraud is becoming more and more effective because technologies such as deepfake are making synthetic identity fraud even more sophisticated, along with data breaches that have long been used to steal other people’s identities. In other words, cybercriminals now have more sophisticated means to outfox know-your-customer processes that have traditionally been used to verify legitimate transactions.
Curiously, the most common type of fraud committed in different countries tends to vary, and that is by design. Cybercriminals know there might be flaws in the company’s infrastructure of every country, and they look for those flaws and exploit them accordingly. Costly chargebacks, card-not-present channels and loyalty programs are some of the vulnerabilities being exploited by these nefarious individuals, and they are likely to find even more ways to perpetuate their crimes.
This means businesses will have to be ready for fraud—always. Three best practices, in this case, are as follows:
- Make sure you have a team that focuses solely on fraud and does not wear multiple hats. That means your IT team should not be moonlighting as your fraud team as well. Having said that, your fraud team should not be working in isolation either. Instead, it must work with other departments that might be affected by fraud to get full visibility of what is happening and what needs to be monitored closely.
- Evaluate the fraud infrastructure constantly and keep improving it. This is especially true for the introduction of new promo programs or when platforms are updated, as it is in these instances when systems are at their most vulnerable—more so to fraudsters who have the latest technologies at their disposal.
- Leverage network data from every resource available. The idea here is to avoid working in silos, especially when you can get plenty of help. Among those you can work with in this regard are other companies, the government, fraud platforms and data partners such as Ekata, whose expertise in identity fraud prevention is sure to come in handy. Remember, the more data you leverage, the more insights you gain.
Fraud will always be a big problem but it can be minimised. For that to happen, however, business leaders will need to be proactive against it and find the right partners in the fraud-fighting space. These partners will bring value not only with their dynamic identity data and technology but also bringing in the necessary market expertise that can help you understand what you need and how to have a cohesive fraud methodology, process and knowledge.
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