Adyen finds the UK retail sector loses £11.3 billion to payment fraud annually

Adyen, the global financial technology platform of choice for leading businesses, has today published new research revealing the billions the UK retail sector loses to fraudulent activity annually.

Working alongside the Centre for Economic Business and Research (Cebr), Adyen found that the retail sector lost £11.3 billion to fraud in 2023.[1] On average, enterprises lost £1.4 million to fraudulent attacks, though luxury fashion retailers lost £2.8 million, clothing and accessory businesses £2.6 million and health and beauty brands £1.1 million each.

Over a third of UK businesses (35%) fell victim to fraudulent activity, cyber-attacks or data leaks over the last 12 months, which has increased by 37% when comparing to 2022’s numbers.

The research found that those businesses who predicted to grow their revenues by 50 - 100% or more in 2024 also lost the highest amount to fraudulent attacks over the past 12 months (£3.8 billion), as Adyen warns that fast growth must be met with the right technologies in place to protect the business and customers.

Fraudulent activity is also impacting shopper wallets, with 33% of UK consumers becoming a victim of payments fraud over the past year, compared to 23% falling victim in 2022. Payment fraud is defined as a fraudster stealing someone’s credit or debit card number, or checking account data, and using that payment information to make an unauthorised purchase.

Of those consumers who fell victim to payments fraud in 2023, £311.09 was the average amount lost per person in the UK – an increase of 16% when Adyen last conducted the survey in 2023.

However, despite the significant increase in fraudulent activity, only two-thirds of businesses (63%) said that they have effective fraud prevention systems in place – an increase of 10 percentage points since last year (53%).

Impact of fraud on consumer behaviour

The risk of fraud has impacted consumer behaviour while shopping, both in-store and online. In fact, a quarter (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 which have higher security measures, and 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 – despite the perceived inconvenience that this can cause.

Business response

Businesses are actively exploring how they can respond to the growing threat of fraud, in order to protect both themselves and their customers. More than half (47%) have actively considered changing their payments provider to one that can offer improved fraud defence mechanisms.

Furthermore, 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.

“Fraud is a pervasive challenge for retailers, and today’s findings demonstrate how it can significantly impact profits” said Roelant Prins, CCO, Adyen. “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.”

“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.”

“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.”

ENDS

Notes to editors

Consumer research

• 38,151 adults polled across the UK, Japan, France, USA, Brazil, Portugal, Poland, Italy, Germany, Australia, Spain, Netherlands, Sweden, Canada, Mexico, Singapore, Malaysia, Hong Kong, India, Austria, Switzerland, Belgium, Norway, Denmark, UAE, and China

• 2002 consumers polled in the UK

• Survey conducted between 15 January 2024 – 29 January 2024

Merchants research

• 13,177 merchants across the UK, Japan, France, USA, Brazil, Portugal, Poland, Italy, Germany, Australia, Spain, Netherlands, Sweden, Canada, Mexico, Singapore, Malaysia, Hong Kong, India, Austria, Switzerland, Belgium, Norway, Denmark, UAE, and China (at least 500 business respondents in each country)

• 504 merchants polled in the UK

• Survey conducted between 15 January 2024 – 1 February 2024

Cebr research

• The Cebr was commissioned to understand the impact of payment fraud lost across the world.

Financial figures represent survey-implied values for the annual losses caused by payments fraud. These figures are scaled based on the responses of different demographics to their experiences of fraud and official data on business populations and revenues, including OECD data. Censuswide did not poll sole traders, and the Cebr modelled data was for those businesses with more 20 or more employees.

About Adyen

Adyen (AMS: ADYEN) is the financial technology platform of choice for leading companies. By providing end-to-end payments capabilities, data-driven insights, and financial products in a single global solution, Adyen helps businesses achieve their ambitions faster. With offices around the world, Adyen works with the likes of Meta, Uber, H&M, eBay, and Microsoft.