Payment fraud has become an increasingly sophisticated threat. Insights from our recent webinar offer a closer look at emerging trends and strategies to address changing risk.
The Rising Tide of Payment Fraud
If fraud were a business, it would be one of the largest and fastest-growing industries in the world. E-commerce fraud is expected to rise from $44.3 billion in 2024 to $107 billion by 2029, a growth of 141%. This exponential increase underscores the adaptability and persistence of fraudsters in exploiting new payment methods and technologies. Across the Sift Global Network, 2024 payment fraud attack rates remained high at 3.3%.
The Shift to Alternative Payment Methods
Loyalty points surfaced as a rising target for fraudsters, surpassing traditional methods like credit and debit cards. The exploitation of weaker identity checks in accruing and using loyalty points represents a goldmine for fraudsters. The Q1 2025 Digital Trust Index shows that points from rewards programs had the highest fraud attack rate at 6.19%, followed by financing options at 5.15%, and prepaid cards at 4%.
“Fraudsters are pivoting. They’re moving away from traditional payment methods and moving upstream because they know that all these traditional payment methods are guarded really heavily,” explained Sudhir Lanka, Sr. Manager, Head of Fraud Strategy at Grubhub. “There are standard guardrails and payment guardrails that have already been set up for decades and decades, and I think fraudsters have realized that the least resistance is within these alternative payment methods.”
Navigating Industry Vulnerabilities
Certain industries are targeted more by fraudsters. The ticketing and reservations industry, for example, has become prime prey for fraudsters recently. High-demand events have forced ticketing platforms to process transactions more quickly to meet customer expectations, opening the door to more fraudulent activities. As a result, the ticketing industry saw an 85% rise in attempted payment fraud YoY, with the fraud attack rate reaching 7.4%.
Financial institutions and fintech platforms saw the highest year-over-year increase in attempted payment fraud rates at +90%. These industry-specific fraud trends continue to shift, making it crucial for businesses to stay vigilant. Alexander Hall, Trust and Safety Architect at Sift, pointed out that compromised identity information holds untapped value, enabling fraudsters to pivot from payment data to identity-related fraud.
“The compromised identity information in the hands of fraudsters hasn’t yet been fully realized for its value, and I think this is starting to illustrate that fraudsters are going upstream and moving from payment information up to identity-related fraud, which then empowers them to come back with more payment fraud.”
The Role of Fraud-as-a-Service
Over time, fraud has become more democratized, with more avenues and opportunities for anyone to participate in fraudulent activities in the hopes of making easy money. 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.
“Fraud-as-a-service is where a professional fraudster is offering their services to the network, whether it’s through Telegram or Signal, dark web, deep web, all of these different channels and forums. And they’re offering their services. We see that primarily restaurants, QSRs, and rental companies are major targets,” says Hall.
How to Proactively Prevent Payment Fraud in 2025
The increasing sophistication of payment fraud demands an equally intelligent approach to fraud prevention. By understanding the tactics and motivations of fraudsters, businesses can develop scalable strategies to protect their platforms and customers.
Hall and Lanka emphasize the importance of a multi-pronged fraud strategy that encompasses holistic monitoring from account creation through checkout. They stressed the importance of using dynamic rule sets, balancing friction to avoid customer insults, and leveraging advanced technologies such as device intelligence and behavioral analytics. The Q1 Index report supports these insights, suggesting the adoption of comprehensive fraud detection measures across different touchpoints, from traffic monitoring to checkout processes.
Businesses today have unprecedented access to data, yet many lack the tools to accurately assess the trustworthiness of their users. It takes cross-dimensional identity intelligence to confidently combat fraud and enable growth.
“Fraud isn’t just about mitigating losses or bringing back lost revenue. It’s also about rebuilding that trust with the customer, building that brand back to make them feel safe so they come back and transact on our platform,” concluded Lanka.
Watch the on-demand webinar or check out the full report.
