Thriving E-commerce Means Increased Fraud Exposure

Thriving E-commerce Means Increased Fraud Exposure

Jakarta, Indonesia, June 26, 2018: Three quarters of Indonesian consumers are making online purchases, with Travel, Food and Beverage, and Electronics being the top categories. However, as consumers continue to look towards convenience, fraud exposure will likely increase - these are the findings of the Digital Consumer Insights 2018 by the world’s leading information services company Experian, co-authored with leading ICT market research and advisory firm IDC.


The Digital Consumer Insights 2018 report is based on a consumer survey across ten APAC markets including Australia, China, Hong Kong, India, Indonesia, Japan, New Zealand, Singapore, Thailand and Vietnam. It looks at how businesses fare in fraud management, through their customers’ eyes and is a complementary report to the Fraud Management Insights 2017 report which looked at fraud management through the eyes of enterprises.


The report found that there was an interplay between convenience and fraud. With the growth of convenient interaction and transaction platforms such as frictionless payments, and a continuous goal to provide better and seamless customer experiences, opportunities for fraud increases.


“Indonesia is one of the fastest-growing e-commerce markets in the world, with 74% of respondents having made online purchases,” said Dev Dhiman, Managing Director, Southeast Asia and Emerging Markets, Experian. “However, fraud rates are also high, with an average of 25% of Indonesians having experienced fraud across various e-commerce and services segments, and about a third (35%) intending to switch service providers when fraud occurs.”


“Unfortunately, the reality is that greater digital convenience is linked to higher fraud exposure. However we also found that greater fraud exposure may lead to consumers being more likely to adopt convenient security measures like biometrics – which will allow businesses to ensure a seamless customer experience while managing fraud.”


11% of Indonesians have indicated that they are willing to adopt biometrics (e.g. fingerprinting, facial recognition) in commercial applications. Indonesia ranks fifth in this area, after the other emerging economies of India, China, Vietnam and Thailand.


The Vicious Cycle of Fraud Response: Managing the Fraud Response Cycle and Negating Business Risks

The research found that mismanagement of fraud response results in two different types of losses for companies, due to differing reactions from consumers which are based on their risk attitudes and perceptions. The report identified two groups of consumers, the Digital Voyagers and the Digital Pragmatists. Digital Voyagers dominate in mobile-led, emerging economies and they are more convenience-driven and less risk-averse. On the other end of the spectrum are Digital Pragmatists who tend to come from mature economies and are more cautious and concerned about security.


“Understanding the difference between Digital Voyagers and Digital Pragmatists is important for companies as they react differently to fraud,” said Dhiman. “In the case of Digital Voyager centric countries, like Indonesia, companies may face escalating fraud costs as digital consumption continues and companies absorb fraud losses to retain customers. In Digital Pragmatist centric countries like Hong Kong, people are more likely to avoid digital transactions in fear of fraud and this results in a loss of digital revenue for businesses.”


Consumers’ Willingness to Share Data

One of the ways companies can help protect against fraud is to have high quality information about their consumers so that they are able to properly verify transactions. When asked, 45% of Indonesian respondents are willing to have their personal data shared with businesses specifically for better fraud detection.


Consumers are also selective in the information they share with companies, with 4.5% of Indonesians saying that they have provided inaccurate information to avoid disclosing personal data. This is lower than the APAC average of 5%. Indonesians are also third most likely in the region to supply inaccurate information to companies, behind Thailand and Vietnam. 31% have made mistakes in basic personal details like addresses, phone numbers and names, 27% have made mistakes in providing highly guarded personal information like payment details, and 24% have given wrong information relating to their age, gender, income and education level.


“Across the region, we found that there is a trust gap between people and organisations,” said Dhiman. “Consumers are submitting inaccurate data or purposely omitting important information to companies. This, unfortunately, results in it being more difficult for businesses to identify their customers online and fight fraud effectively. With the acceleration of the digital economy, fraud challenges will only grow and companies must ensure they leverage the right technologies and solutions to address the complexities of the digital age.”


Findings of Indonesian Consumer Behaviours and Attitude

Japan, New Zealand, Australia, Hong Kong, Singapore are Digital Pragmatist Centric Countries – where consumers have higher risk perceptions and feel security is more important than convenience

Thailand, Indonesia, China, India, Vietnam are Digital Voyagers Centric Countries – where consumers are less risk averse and less guarded in sharing their data

Indonesian Consumer Behaviour Examples



Fraud is not acceptable


Higher tendency to switch providers in event of fraud



Lower tendency to switch providers in event of fraud.



Indonesians (25%) have the second highest direct fraud exposure in the region, behind Vietnam at 28%.


Only 35.5% of Indonesian consumers will switch service providers when fraud occurs, the lowest in the region.  67.5% believe that fraud is unacceptable, also the lowest in the region.

Lower willingness to share data to get better experience.


More accurate / Higher quality of submitted data.


Higher willingness to share data to get better experience.


Lower quality of submitted data.



45% of Indonesians are willing to share data for fraud detection (43% APAC average).


Only 14% of Indonesians are concerned about supplying personal data in a high-risk environment like a public Wi-Fi network compared to 22% in Australia. They are the second least concerned country in the region after Japan (12%).  However, Japan and Indonesia exist in very different fraud environments. 25% of Indonesians have been affected by fraud directly compared to only 6% in Japan. 


Notably the study found only a weak link between consumers being selective and guarded with their data, and with fraud, indicating businesses should not depend on consumer actions alone to reduce fraud.

Lower consumption of digital services


Lower adoption of mobile payment


Higher consumption of digital services


Higher adoption of mobile payment



Indonesians were willing to pay up to USD138 per mobile or contactless payment transaction, third in the region behind Australia at USD143 and Thailand at USD140 per transaction. Japan and Vietnam were the lowest at USD92 and USD89 per transaction.


They have the second highest mobile spend limit as a percentage of monthly income, at 47.9%, just behind Vietnam at 51.4%.


To download Digital Consumer Insights 2018, please visit: /insights/digital-consumer-insights-2018

Read full article


By Experian 06/26/2018

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