Payment Fraud in the New Age of Digital Transformation

Unsurprisingly, credit cards remain the top most-used payment method among consumers. Alternative payments such as digital wallets and BNPL continue rising in popularity, with digital wallet ownership forecasted to grow 15.3% by 2029 and the global BNPL market size projected to grow 20.7% by 2032. 

Businesses should be prepared to meet this increased demand for alternative payments by providing a variety of payment options for consumers and ensuring additional security checks are in place.

More than 1/3 (34%) of consumers have seen offers to participate in payment fraud online, up from 18% last year. These payment fraud offerings include posts on social media sites featuring methods for committing fraud, message boards advertising stolen credit card info for sale, or groups in messaging apps offering to buy deeply discounted services or merchandise for a small fee.

Moreover, nearly 1/4 (23%) of consumers have personally, or know someone who has, participated in payment fraud, up from 19% last year. Taking part in this form of fraud involves knowingly using stolen payment information to make a purchase, or coordinating with other people to obtain free or discounted services or merchandise through unofficial channels like online forums, chat groups, or messaging apps. Of these 23%, 65% know someone who participated in payment fraud and 35% personally participated in the fraud.

Fraud is becoming more democratized as tips on how to carry out scams permeate social media feeds and deep web forums. Fraudsters are increasingly advertising and selling fraud tools and expertise in a practice known as fraud-as-a-service, lowering the barrier for anyone to participate in fraud. 

Silver Bullet Configs are one such scheme raising alarm bells. Found on deep web forums like Telegram, this service equips fraudsters with a list of settings and attributes for their device to bypass security measures on a given platform, allowing just about anyone to configure their device to test compromised payment information and login credentials. The service comes with multiple options, including free and paid versions of device configurations, reviews from other fraudsters, and a chat functionality. Because these configurations may be used by multiple bad actors, it’s crucial for businesses to leverage device intelligence in their fraud detection to accurately block these attacks.

Online shopping habits vary significantly by generation, particularly between Baby Boomers and Gen X compared to Millennials and Gen Z. Younger generations are less likely to trust the security of credit cards and prefer using alternative payment methods such as digital wallets, BNPL services, and cryptocurrency. Millennials and Gen Z are also more inclined to continue using a site even after experiencing payment fraud. Additionally, these younger generations are participating in fraudulent activities at a higher rate, blurring the lines between legitimate consumers and malicious actors. Social sites present more opportunities for fraud for Gen Z and Millennials, making it easier for them to engage in such activities.

Consumers ranked the payment methods they consider most secure for online purchases, with credit cards and digital wallets emerging as the most trusted options. In contrast, other alternative payments, such as BNPL services and cryptocurrency, are perceived as less secure. BNPL, in particular, is attractive to fraudsters due to the low upfront payments it requires, making it easier to exploit through the use of compromised identity information and payment details.

Payment fraud not only has financial repercussions for businesses—it also negatively impacts consumer sentiment. Based on Sift’s survey, more than 2/3 (68%) of consumers stated they would stop shopping on a site if their payment credentials were used for unauthorized purchases. Additionally, nearly two-thirds (62%) of consumers have abandoned an online transaction due to concerns over payment security. And in the event of unauthorized purchases, the majority of consumers believe that the responsibility should fall on the business or financial institution rather than the individual.

*On behalf of Sift, Researchscape International polled 1,075 adults (aged 18+) across the United States via online survey from January-February 2025.