Cyberattacks have resulted in significant financial losses for the UAE retail sector, according to a new report by payments company Adyen.
Combining cyberattacks and data breaches, businesses in the retail sector have suffered an average loss of around AED 11M due to fraudulent activities over the past year, as stated in the UAE Retail Report 2024: Balancing customer experience and business efficiency.
Conducted in collaboration with the Centre for Economics and Business Research, the research indicates that 44 percent of UAE retailers encountered fraudulent incidents related to cyberattacks or data breaches in the previous 12 months, reflecting a 39 percent increase compared to the previous year.
Individually, victims of payment fraud in the UAE experienced an average loss of AED3,250 each, marking a 270 percent year-on-year rise, according to the report.
Payment fraud involves criminals stealing payment details, such as credit card numbers or checking account information, to make unauthorized purchases.
Despite growing concerns about cybercrime, 68 percent of UAE businesses claimed to have effective measures in place to prevent fraud.
However, 29 percent of consumers now prefer to shop at stores with higher security measures, and 28 percent expect companies to employ multiple identity verification methods for online purchases.
Roelant Prins, Chief Commercial Officer at Adyen, commented, “Fraud is a widespread challenge for retailers, and today’s findings illustrate how it can significantly impact profits.”
Prins emphasized the need to invest in appropriate defense mechanisms to protect both companies and customers from increasingly sophisticated fraudsters, including the use of artificial intelligence.
Machine learning tools, Prins added, can identify genuine customers and fraudulent activities across sales channels in real-time.
The threat of fraud has also influenced consumer behavior, with 22 percent expressing less confidence in shopping security compared to a decade ago.
More than half of retailers are contemplating switching payment providers for enhanced fraud protection, and 67 percent are considering compliance with new EU privacy regulations.