Businesses in the UAE on average encountered losses of approximately AED11 million ($3.08 million) as 44% of businesses experienced cyberattacks, or data breaches last year, marking a 39% increase.
This is according to Adyen, the global financial technology platform of choice for leading businesses, which has published a new research.
Working alongside the Centre for Economic Business and Research (Cebr), Adyen found that the retail sector globally lost $429 billion to fraud in 2023.
Shopper wallets
Fraudulent activity driven by cyberattacks is also impacting shopper wallets, with over a third (35%) of consumers globally 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.
In the UAE, the average financial impact per affected individual reached AED3,250 in 2023, indicating a 270% increase from the previous survey. Despite this rise, 68% of UAE businesses report having effective fraud prevention measures, maintaining nearly the same level of preparedness as the previous year (69%).
Impact of cyber fraud on consumer behaviour in UAE
The risk of fraud has influenced consumer behaviour while shopping, both in-store and online. In fact, a quarter (22%) of consumers now feel less secure when shopping today compared to 10 years ago, due to the increased risk of payment fraud.
As a result, 29% of consumers actively choose to shop at stores which have higher security measures, and when shopping online, 28% 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 in UAE
Businesses are actively exploring how they can respond to the growing threat of cyberattacks, in order to protect both themselves and their customers. More than half (68%) have actively considered changing their payments provider to one that can offer improved fraud defense mechanisms.
Furthermore, 67% have started considering how their businesses 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. “Fraudsters 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 defense, 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.”--TradeArabia News Service
