Average fraud loss by country
Fraud risk by country
$28 - $1674
Average fraud success value
0.37% - 50.81%
Fraud attempt rate
2023 Visa Merchant Fraud Report
Based on insights from 2.7 billion+ global transactions worth $381B from our flagship fraud prevention solution Decision Manager, Visa has compiled our latest findings about fraud trends and AI automation.
Fraud comes in many forms and is always changing. At Visa, we have noticed three main types in 2023:
Fraud types
Account takeover (ATO) fraud remains prevalent and can seriously harm victims, but it is less common because of the complexity involved, registering at about one-third the rate of payment and new account fraud attempts.
Payment fraud
A core part of money laundering and organized crime, has the highest rate of fraud attempts at 2.94%.
While it doesn’t provide a lot of value per transaction, this type of fraud is widespread because it’s easy to attempt and can be automated without much effort.
Preventing payment fraud can limit illegal money movement and protect consumers and merchants at the same time.
New account fraud is the most common (525,000 transactions, 39% of all fraud) and has the highest fraud rate (0.19%). It’s preferred by criminals because they can maximize value and control and it takes longer to detect.
Device fingerprints
Indicators of risk
Digital fraud, committed either online or through an app, makes up the largest share of fraud attempts due to its ease of access. Transactions performed with a repeated device fingerprint in short time periods (0–180 minutes) are 2.8x more likely to be fraud than the average. Decision Manager’s ThreatMetrix pinpoints both the device fingerprint and the time interval to intelligently prevent fraud.
Email domains
Location
Fraud is more likely to be committed by users outside of a merchant’s home country.
Card type
Prepaid cards have the lowest fraud rate of any card type.
Day of week
Fraud decreases on weekends, especially Sundays and especially in North America.
Fraud is attempted much more often than it succeeds. The difference between these two outcomes is the fraud success rate, the percentage of fraud attempts that actually result in a loss. The average fraud success rate across all industries is 2.44%.
Industry analysis
Despite attracting the greatest number of fraud attempts, ecommerce has a fraud success rate of 0.46% - well below the overall average.
Industries with the largest growth in fraud risk over the last year
Digital Products – Software / Gaming – increased 202% YoY
Digital Wallet and Transit & Automobile both increased by nearly 4x YoY
Financial Services saw an increase in fraud rate of 60x at its peak in January ’23.
Industries making significant progress toward reducing their fraud risk in the last year
Charity has seen sustained low rates of fraud across the DM customer base after a 2022 peak of more than 4%. Current industry rates for DM customers average .01% in the past eight months.
Telecommunication and Acquirer Solutions Standard have both cut their fraud rates nearly in half over the past 13 months with Telecommunication in particular using Decision Manager to maintain stable low rates of fraud well below what the industry generally experiences.
Industries with the highest fraud rates
Digital
Online marketplaces
Electronics
Transit
Insurance
Criminals have been using AI for years to automate fraud—and you should be using it, too. Machine learning models can use AI to determine which transactions are likely valid or risky, helping you decide which to let through.
Visa’s Risk Index model that powers Decision Manager automatically identifies more than half of all transactions as highly valid. The fraud that slips through is a miniscule 0.02%, so our merchants can confidently accept these transactions without spending additional time and resources scrutinizing them for fraud.
But that’s just the starting point. It doesn’t account for customization based on product, industry, customer, or other factors. We’ve found that layering this kind of human expertise on top of automation provides the best results.
Automation and AI
Only 1.3% of merchants using Decision Manager still rely on manual review, and 98.4% of transactions are decided with automation.
The 2023 MRC Fraud Report found that 6 in 10 merchants want to reduce or eliminate manual review. You may be concerned about increasing fraud, but we’ve found that fraud rates don’t increase when manual review is eliminated—in fact, they slightly decrease. And given the significant costs associated with manual review, it’s no surprise that most of our merchants have moved away from it. Data show that you could save up to $2,500 per 1 million transactions with an automated strategy.
Moving away from manual review
Fraud is constantly evolving, but AI powered by insights from billions of Visa datapoints can adapt to ever-changing trends at scale. If you want to be a part of the 98% of merchants leading with automation, you’re in the right place.
Fighting the future of fraud
The information presented in this report contains aggregate data derived from the Decision Manager client base between February 2022 and February 2023. Individual client data is not shared or disclosed in any form.
The purpose of this report is to provide generalized insights and trends, ensuring the anonymity and privacy of our valued clients. The contents of this report should not be construed as legal, financial, or professional advice, and any actions taken based on this information are solely at the reader's discretion. We disclaim all liability for any loss or damage arising from the use of this report or reliance on its contents.
Results may vary and are not claimed to represent typical results and are not intended to represent or guarantee that anyone will achieve the same or similar results.
Case studies, comparisons, statistics, research, and recommendations are provided “AS IS” and intended for informational purposes only and should not be relied upon for operational, marketing, legal, technical, tax, financial or other advice. Visa neither makes any warranty or representation as to the completeness or accuracy of the information within this document, nor assumes any liability or responsibility that may result from reliance on such information. The Information contained herein is not intended as investment or legal advice, and readers are encouraged to seek the advice of a competent professional where such advice is required.
Premium email services are being used to get past fraud strategies, because businesses are focused on the free domains.
Free email domains
All transactions
Fraud attempts
75%
84%
Unique/paid domains have the highest fraud success rate, even though they don’t have the highest fraud rate. While access to these domains is more limited, when fraud is attempted...
92% of total transactions are rated likely to highly valid–and within this group, only .07% are fraudulent. On the other hand, the other 8% of transactions rated likely to highly risky, have a fraud rate of 0.8%–over ten times higher. With AI alone, you could confidently accept 92% of your transactions.
But that’s just the starting point. It doesn’t account for customization based on product, industry, customer, or other factors. We’ve found that layering this kind of human expertise on top of automation provides the best results.
0.54%
0.65%
0.65%
1.12%
0.64%
Average across all industries
0.15%
14.93%
14.24%
3.87%
5.88%
5.35%
8.07%
50.81%
$271
$397
$195
$531
$80
$274
Average fraud loss by country
Fraud risk by country
Industries making significant progress toward reducing their fraud risk in the last year
Charity has seen sustained low rates of fraud across the DM customer base after a 2022 peak of more than 4%. Current industry rates for DM customers average .01% in the past eight months.
Telecommunication and Acquirer Solutions Standard have both cut their fraud rates nearly in half over the past 13 months with Telecommunication in particular using Decision Manager to maintain stable low rates of fraud well below what the industry generally experiences.
... it is 23% more likely to succeed than with organizational or free domains.
Indicators of risk
...it is 23% more likely to succeed than with organizational or free domains.
Account takeover
Payment fraud
New account fraud
Unique/paid domains have the highest fraud success rate, even though they don’t have the highest fraud rate. While access to these domains is more limited, when fraud is attempted, it is 23% more likely to succeed than with organizational or free domains.
Account takeover
Payment fraud
New account fraud
Account takeover
Payment fraud
New account fraud
Learn about Decision Manager
Learn about Decision Manager
But that’s just the starting point. It doesn’t account for customization based on product, industry, customer, or other factors. We’ve found that layering this kind of human expertise on top of automation provides the best results.
The 2023 MRC Fraud Report found that 6 in 10 merchants want to reduce or eliminate manual review. You may be concerned about increasing fraud, but we’ve found that fraud rates don’t increase when manual review is eliminated—in fact, they slightly decrease. And given the significant costs associated with manual review, it’s no surprise that most of our merchants have moved away from it. Data show that you could save up to $2,500 per 1 million transactions with an automated strategy.