Through The Grapevyne

Ep 5: UK fraud levels and the social commerce opportunity

Each month we weigh in on hot topics, buy-outs, new mandates, latest tech buzz and sometimes even news teetering on bizarre. We bring together voices from the industry to share insight and shed light on what’s happening in the world of fintech.

1 month ago • 5 min read

Ep 5: The one where UK fraud levels send out shockwaves and we’re dreaming of a winter wedding between social commerce and Open Banking

UK fraud levels send out shockwaves

It’s official! Social Market Foundation (SMF) recently shared data that UK consumers are more likely to be hit by card fraud and suffer higher losses than their European counterparts.  ¿Por qué está pasando esto? 🥺

Remember 2019? Those pre pandemic days when someone would cough and you wouldn't run away and almost fall into a bush or walk into a pole? 😳 Well, data from then showed that there were 134 card frauds per 1,000 people in the UK at a cost of over £8,800.

To put some seasoning on the data, 84% were the result of card-not-present fraud (CNP). Not quite Tinder swindler, but fraudsters use card details without the physical card in phishing and malware scams.  In contrast, Germany's fraud cost was under £2,000 and only 15 per 1,000 people

In a Dear John letter by the SMF to the UK government, they said: “ Britain’s shocking record on card fraud compared to major European economies is yet another reminder of how UK law enforcement has failed to keep up with the epidemic.” 😭

What's the difference between the UK and Germany? Could it be influenced by payment culture, type of fraud, dominant payment method or prevalence of scams? SMH believes that in the UK, "the entire fraud enforcement landscape needs an overhaul". A positive is that the SCA mandate was rolled out in the UK earlier this year after a delay, so it will be interesting to see the CNP numbers for this year. A negative, however, is that the cost-of-living crisis will likely push fraud through the roof with more sophisticated scams by fraudsters. 🤔

Earlier this month, the government announced the launch of a ‘fraud squad’. Sadly, it’s not aimed at tackling CNP and other card fraud but rather to “hunt down fraud committed against the public purse”.  😳

Open Banking is here, and it delivers a solution to fraud. Built into the payment flow without sacrificing customer experience, it has a far superior method of payment when it comes to security. Open Banking has bank-level security built into its technology. Payments are made directly from the customer's bank account to the merchant's bank account, with no details ever being shared. CNP fraud is prevented by strong customer authentication that requires customers to authenticate payments through fingerprint (touch ID) or facial recognition (face ID), which only they can authorise.

Chancellor Nadhim Zahawi recently tried Open Banking payment too  ….  Open Banking has truly arrived. @UKgov et al … tell your friends to get with our friends! P.S You’re welcome! 

We’re dreaming of a winter wedding between social commerce and Open Banking

Who can remember a time when social media was just about the odd photo album and status updates? No filters, just vanilla lives trying to be cookies and cream. Over the last decade, we’ve seen social media grow from what seemed to be an awkward yet cool teenager to become an integrated platform businesses can use as a tool to grow brand awareness, discover new audiences and make more money than before. It’s the weapon of choice for retailers and entrepreneurs. 

Accenture study, Why the future of shopping is set for a social revolution

It's nothing short of a people-powered, democratic retail revolution. And it's incredibly effective. Why? Because it seamlessly blends social experiences and e-commerce transactions through a single path to purchase, all enabled by a single platform. 

A tag is no longer a tag but an entry into a kaleidoscope of new sales, and an image is a carefully curated, highly executed vehicle to convert and drive sales. It’s closed the gap between towering retail giants and pushed more sales down to entrepreneurs and small businesses. This world of social commerce has turned everyone into a brand, an influencer or an entrepreneur. 

We’ve gone from instore to e-commerce then to Instashops and TikTok live selling. Sales, sales, sales – for anyone and everyone who is willing to put effort into their audiences, deliver great customer service and have an overall fantastic product. Social commerce has proven to be a convenient way to shop as customers can do everything from within a social media app. These shoppable posts are more connected, personal and community-driven experiences.  It’s what happens when a steroid goes on steroids. 


What the numbers say:

  • 3.5 billion people – 44%+ of the world’s population – use social media.

  • Social commerce will reach £1.45 trillion by 2025.

  • 42% of Gen Zs and 39% of millennials have taken on a side hustle.

  • In China alone, 463 million people are already making money through social media.

  • 59% of social buyers say that they are more likely to buy from a small business when shopping through social commerce versus online.

(and breathe)

It comes as no surprise that Meta CEO Mark Zuckerberg announced that Instagram users in the US will soon be able to use their new “payments in chat” feature.  Building on the in-app experience, Instagram users will be able to buy products from and track orders via direct messages.

This is everything Open Banking is perfectly suited for, and hopefully in the future, alternative payment methods to Paypal, which is used by Instagram and the giant that is Meta, can all step in. 

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