Ecommerce Fraud Prevention: Challenges and Opportunities in Balancing Customer Experience and Risk

85% of merchants struggle to balance customer experience and fraud prevention. Global ecommerce sales projected to rise to $8 trillion by 2028, with merchants losing up to $448 billion annually due to payment fraud and false declines. Merchants see the greatest opportunity for improvement in fraud prevention at the initial checkout and purchase flow. Riskified showcased its AI-first tech to combat sophisticated fraud and policy abuses at its Ascend 2025 event.

Title: Balancing Customer Experience and Fraud Prevention: Challenges and Opportunities in Ecommerce

Ecommerce is booming, with global sales projected to reach nearly $8 trillion by 2028 [1]. However, this growth is accompanied by significant challenges, particularly in fraud prevention. According to a survey conducted by Riskified at its Ascend 2025 event, 85% of merchants are struggling to balance customer experience with fraud prevention [1]. This balancing act is crucial as merchants lose up to $448 billion annually due to payment fraud and false declines [1].

The survey revealed that the biggest challenge for merchants is reducing friction for good customers without increasing fraud risk. This highlights the complexity of optimizing customer experience while maintaining robust fraud prevention measures [1]. Approximately 47% of respondents estimated that up to 5% of legitimate customer orders are falsely declined, equating to approximately $50 billion in lost revenue [1].

The initial checkout and purchase flow was identified as the area offering the greatest opportunity for improvement in fraud prevention. This indicates that merchants are focusing on reducing friction and risk at this critical point in the customer journey [1]. Riskified showcased its AI-first technology, such as Adaptive Checkout, Policy Protect, and Dispute Resolve, to combat sophisticated fraud and policy abuses at its event [1].

The rise of AI has also changed the landscape of financial fraud. Generative AI has enabled fraudsters to create synthetic identities and fake documents, leading to an increase in fraudulent activities [2]. However, AI is also being used as a defense mechanism, with financial institutions implementing machine learning to detect anomalies in real-time [2].

Regulators worldwide are responding to these threats with stricter rules, including the EU's Digital Operational Resilience Act (DORA) and the EU AI Act. These regulations aim to ensure that financial services and fintech companies are compliant and resilient [2].

To navigate this evolving landscape, fintech companies must design for trust. This includes building inclusive financial products, making compliance a product advantage, being transparent, and seeing risk as a design input [2]. The future of fintech belongs to those who can balance innovation with oversight and build trust with customers.

References

[1] https://www.stocktitan.net/news/RSKD/85-of-merchants-battle-to-balance-customer-experience-and-fraud-ld7sg2d2p8fe.html
[2] https://www.forbes.com/councils/forbestechcouncil/2025/06/13/fraud-ai-and-compliance-designing-for-trust-in-fintechs-future/