57% of merchants see online fraud as the greatest threat to their business, while they expect to lose an average of 1.8% of their income to fraud.

This is one of the findings from Cybersource’s 2010 UK Online Fraud Report, which surveys consumers and retailers about how fraud affects their business and shopping habits.

Online retailers’ concerns about fraud

The perceived threat from online fraud has grown over the last two years, with just 6% citing fraud as a major threat in 2007. On average, merchants reject 4.6% of online orders due to suspicion of fraud, a percentage which has remained consistent over the years.

This is one are where retailers can improve, since not all of these rejected orders will actually be fraudulent, meaning that they are missing out on revenue, thanks to a mixture of too much caution and lack of expertise.

Of all accepted orders, an average of 1.6% of all accepted orders ultimately prove to be fraudulent, though this is an improvement on last year’s study. In 2008, 8% of businesses experienced fraud on more than one in ten accepted orders. For 2009, only 4% of merchants saw this level of fraud.

Consumer attitudes to fraud

Based on a survey of 1,004 people, 50% of people still don’t shop online in the UK, which represents a large untapped market. While the majority said they simply preferred shopping offline, concerns about fraud are still an issue.

71% of all consumers surveyed said that they had concerns about online fraud, despute the fact that the actual threat is minimal. The survey suggest that negative stories about online fraud have an effect, while just over a third have either been a victim of card fraud or know someone who has.

24% believe that retailers are responsible for combating fraud, 16% placed this on banks, while 12% on card schemes, while 12% believe it is their responsibility to take measures to minimise the risk of fraud.

The majority (85%) look for signs that the website they are thinking of buying from is secure, while the same percentage will only shop online at what they see at reputable name retailers.

69% look for sites with card security schemes such as Verified by Visa, while 50% will opt for the extra protection provided by using credit cards to shop online.

Mobile commerce

It seems that there is a lack of understanding around mobile commerce, as this previous survey suggests. 78% of consumers said they would never use their mobile phone to make purchases online

4% of consumers said they would definitely use their mobiles for this, while 8% said they would consider buying via mobile.

There is some confusion around the question though, as the term ‘mobile payments’ can cover everything from buying on a credit card through a mobile browser, to an operator billing model, or paying via SMS for things like ringtones.