--- title: "Predictions for Fraud & Payments in 2021" date: 2021-01-06T13:57:00+00:00 author: Grace Proctor canonical_url: "https://www.ravelin.com/blog/predictions-for-fraud-payments-in-2021" section: Blog --- Blog /[3DS & SCA](/resources?search=&category%5B0%5D=134550#resourceContainer "Go to 3DS & SCA"), [Fraud trends](/resources?search=&category%5B0%5D=201169#resourceContainer "Go to Fraud trends") # Predictions for Fraud & Payments in 2021 CEO of Ravelin, Martin Sweeney, discusses the challenges merchants faced in 2020 and what fraud & payments trends to expect in 2021. ![Predictions for Fraud & Payments in 2021](https://storage.googleapis.com/ravelin-website-assets-production/assets/images/_blogSmall/92563/sweeney-fraud-forecast-2021.webp) ## What do you think are the biggest challenges merchants faced in 2020? Clearly 2020 was a difficult year, with every industry facing its own challenges. **It’s been a time of industry extremes:** Either your industry is collapsing and countless people are losing their jobs, or it’s booming and the challenge is to keep up with enormous transaction volumes. For online retailers, it may have felt like every day in 2020 was Black Friday, with operations being stretched to breaking-point. These extreme situations test your fraud and payments systems, and you may have found that they are less agile than you thought - they’re actually fragile. **Working remotely:** There have been dramatic changes in the way businesses work and communicate with teams. Maintaining a productive workplace culture remotely is challenging, often requiring a complete business upheaval. **Issuing banks have been overwhelmed by disputes:** Just look at the travel industry - every cancelled holiday could result in a chargeback. Issuers may have had to adopt a blanket ‘charge it back’ policy, and more customer opportunism means a surge in friendly fraud chargebacks. ## How do you see the environment developing this year? **Online buying boom to continue:** Whilst demand won’t be to the full extent of the height of lockdown, a lot of customers have changed their shopping habits permanently. As a result, sellers will have to find long-term solutions to cope with increased volumes and operational changes. **New fraud patterns means it’s time for new fraud equipment:** The past year's demanding fraud patterns will prompt merchants to realise that they’ve outgrown their current fraud and payment tools. If businesses are going to survive the next couple of years and then thrive, they’ve got to get ahead of the coming changes by doing less with more - fewer people, greater productivity and better fraud detection. ## What fraud trends will merchants need to pay attention to in 2021? **Economic hardship means friendly fraud will increase**: Unemployment is currently being artificially reduced by state subsidy, but once the magic money tree stops shedding, the recession will really bite. People will be poorer, more desperate and more likely to turn to crime. Online fraud is an easy way to commit crimes without feeling like a criminal, as customers can say ‘someone’s been shopping on my credit card’ or ‘hey half of my order didn’t arrive, give me the refund’ and profit. **Refund abuse and promo abuse will increase:** Economic difficulties in 2021 will cause people to take advantage of promotions and refunds even more. Struggling customers will need that £5-off promo more than ever, so will find a way to use it more than once. Whilst promo abuse isn’t strictly fraud, it chips away at the unit economics of the merchant and wastes valuable marketing money, damaging a company’s profitability over time. **More international third-party fraud in Europe:** CNP third-party fraud isn’t going anywhere. Whilst PSD2 and more 3DS will reduce fraud on EU cards, fraudsters will adapt and simply switch to international cards to attack European merchants. Merchants will suddenly have to be more suspicious of international orders, accepting fewer or accepting more risk. ![](https://storage.googleapis.com/ravelin-website-assets-production/assets/images/678481AE-2273-462A-92C5-AAA260A895D8.png)## How do you think the implementation of PSD2 will play out in Europe and the US? **Issuing banks could lose customers**: PSD2 will initially cause disruption. Customers value ease of use, and if an issuer has botched their implementation of 3DS - for example if it’s blocked by ad-blockers or gives a poor user experience - they will just move to another bank. Banks will find it hard to implement strict SCA policies whilst keeping customers happy. **Merchants will face conversion impacts:** Merchant conversion rates will drop when they have to use more 3DS as unauthenticated payments will be declined, so there will be a significant adjustment period as merchants work to make payments frictionless. **US industries will move before regulators:** Most regulators worldwide have the same aspiration: increase authentication to reduce online fraud. However, the US industry will move before regulators, motivated by the superior technology of 3DS2. Whilst 3DS2 isn’t a cure-all, it is fundamentally better, and that’s why we at Ravelin are investing heavily in our suite of best in class 3DSecure products. ## What’s the best advice you have for merchants in 2021? Merchants need a flexible and responsive approach to payments, avoiding a one-size-fits-all ‘let’s just turn on 3DS’ policy. A blanket approach gives complete power over payment acceptance and conversion to the banks, and banks do not have a great track record of user experience and conversion. Ravelin can tell you how each bank is going to behave and shape your user payment journey to be the best possible for any given scenario. Ultimately: expect more fraud and transactions in 2021 and make sure to be agile - not fragile. ![](https://storage.googleapis.com/ravelin-website-assets-production/assets/images/421E5011-67D7-47C6-AF4D-977C765DBAC0.png) ## Author ![Grace Proctor](https://storage.googleapis.com/ravelin-website-assets-production/assets/images/_avatarSmall/91140/fraud-copywriter.webp) Grace ProctorContent Writer (Ravelin alumna) Grace has previously served at Ravelin as a Content Writer. [More from this author](https://www.ravelin.com/author/grace-proctor) ## Related content [Blog / Payments & payment fraud ### Card payment liability shift – everything you need to know to reduce chargeback burden The knowledge you need to make the most of liability shifts and reap the benefits for your company – including saving money on chargebacks. ![Freddie burgess](https://storage.googleapis.com/ravelin-website-assets-production/assets/images/_33x33_crop_center-center_none_ns/281707/freddie-burgess.webp)Freddie Burgess,Senior Product Support Analyst](https://www.ravelin.com/blog/card-payment-liability-shift-for-chargebacks) [Blog / Fraud analytics ### Refund abuse KPIs: How to measure and reduce refund fraud rates What you need to know to assess and quantify refund abuse – as well as to measure whether your refund abuse solution and strategy are delivering results. ![Can](https://storage.googleapis.com/ravelin-website-assets-production/assets/images/_33x33_crop_center-center_none_ns/280078/can.webp)Can Colak,Senior Product Manager](https://www.ravelin.com/blog/how-to-measure-refund-abuse-kpis) [Blog / Press release ### Driven by AI, customers now rival criminals for ecommerce fraud, say merchants Global ecommerce fraud enters a new phase as losses continue to climb. Merchants now view criminals and their own customers as presenting a comparable risk, and there's a gap in AI adoption. ![Ravelin Symbol Blue 1](https://storage.googleapis.com/ravelin-website-assets-production/assets/images/_33x33_crop_center-center_none_ns/187712/Ravelin-Symbol-Blue-1.webp)Ravelin Technology](https://www.ravelin.com/blog/ravelin-fraud-survey-2026-press-release)