$48 Billion Lost in eCommerce Fraud: Is Your Store at Risk?

Online shopping is inflating at breakneck speed, and that’s exciting. But it also means to protect payment systems. In 2024 alone, eCommerce fraud losses worldwide accounted for more than $48 billion. A stark reminder of why merchant payment security cannot be ignored.

Customers like to feel safe while sharing their financial information online. As a business, offering diversified and secure modes of payment not only protects your customers, but also builds trust and increases conversion rates.

Source: Exploding Topics

In this blog, we'll examine the best security features that every eCommerce company should look for in a payment solution. Whether you're launching a new store or upgrading your current platform, these features are essentials for protecting your brand and your customers.

Why Payment Security Is Important in ECommerce

Consumers of today expect secure and hassle-free online shopping experiences. A single security breach will damage your reputation and cost your business thousands of dollars in chargebacks and lost sales.

Secure payment systems reduce the possibility of fraud, support compliance with global data privacy law and help build long-term customer trust. In fact, according to research, 18% of online shoppers are deterred from completing checkout, because they do not have confidence in the website handling their payment information.

Let us consider the essential security elements that make all these concerns vanish.

1. PCI DSS Compliance

The Payment Card Industry Data Security Standard (PCI DSS) is a widely accepted global industry standard for giving assurance that each business handling, storing, or transmitting credit card information has a secure environment.

A PCI DSS Level 1 compliant payment system (the most secure) indicates that it values security greatly. Brands like Stripe, PayPal and Square are level 1 compliant, which is assuring for both the merchant and consumer.

Real-World Example:

When Newegg, a major electronics retailer, suffered a breach in 2018 due to a lack of proper compliance controls, it lost sensitive card data through a Magecart-style attack. This incident highlights why strict PCI compliance is vital for avoiding such attacks.

Source: TechCrunch, 2018

To know more about the different types of eCommerce payment trends, click here

2. Tokenization

Tokenization replaces sensitive payment details like credit card number with a custom token or "token." Such a token cannot be exploited for value if stolen.

Even if there's the remote possibility of a data breach, tokenized information is of no use to hackers. Apple Pay and Google Pay use tokenization to safeguard transactions, enabling customers to be secure while making payments at the checkout counter.

3. End-to-End Encryption (E2EE)

With end-to-end encryption, consumer payment data is encrypted from input until it hits the payment processor. It prevents any third-party access to sensitive data in transit.

Shopify, for instance, uses E2EE to all payment pages to protect secure transactions and consumer data.

4. 3D Secure 2.0 (3DS2) Authentication

3D Secure 2.0 offers a second authentication step before the transaction is completed. It verifies the cardholder's identity by means of biometric scanning or one-time passwords.

It minimizes fraudulent transactions significantly. Companies like Klarna and Afterpay have adopted 3DS2 to add security without interrupting the checkout experience.

5. AI-Powered Fraud Detection and Risk Scoring

Advanced payment solutions use machine learning to monitor for patterns in transactions in real-time. They find suspicious patterns, flag or block transactions and identify patterns.

For example, Adyen uses AI to analyze customer behavior, geolocation and device information to prevent fraud in milliseconds.

Read also: Why AI is the Future of Fraud Prevention in eCommerce

6. Safe APIs and SDKs

APIs (Application Programming Interfaces) are the go-between between your store and payment processor. Secure APIs protected with encryption and authentication deter attacks like injection or spoofing.

Look for alternatives that offer HTTPS connections, OAuth 2.0 and API logging. Diginyze, for instance, uses AI to monitor API traffic and catch anomalies in real time, keeping your platform secure.

7. SSL Certificates and HTTPS Everywhere

An SSL certificate encrypts the connection between your site and your customers. Browsers display a padlock icon or the "https://" prefix when the site is secure.

This easy-to-see visual cue instills immediate trust. GlobalSign says 84% of users abandon a purchase if they identify an unsecured connection.

According to GlobalSign, 84% of users abandon purchases if they see an unsecured connection.

Source: goodfirms

Customer-Facing Features That Build Trust

• Noticeable trust badges (e.g., Norton, McAfee)

• Transparent privacy policies and refund statements

• Instant transaction notifications by email or SMS

Providing these indicators encourages customers to successfully make the purchase with confidence.

What to Ask Before Choosing a Payment Partner

When choosing payment solutions, ask these questions:

• Is the platform PCI DSS compliant?

• Does it use tokenization and end-to-end encryption?

• Does it support fraud detection systems?

• Does it support 3D Secure 2.0?

• Are the APIs and SDKs secure and well-documented?

• Is the eCommerce platform compatible?

Conclusion

A secure eCommerce payment solution doesn't only protect your business it offers a smooth, safe and reliable shopping experience that keep bringing customers back.

As threats online evolve, a strong payment system with better security features becomes a critical part for your eCommerce success. Diginyze is an AI-based eCommerce platform that comes with built-in advanced server, data and payment security for eCommerce businesses ensuring total peace of mind.

Ready to secure your store and build customer trust?Book a free demo now.