Economic conditions have a way of shaking up the marketplace and the ability of e-commerce to produce goods and services for end customers. Factors such as inflation, interest rates, and layoffs are powerful economic forces to be reckoned with. In a recent discussion, Sunny Thakkar, Director, Head of Merchant Fraud Solutions at Worldpay from FIS, and Daniel Keyes, Senior Analyst for Merchant Services at Javelin Strategy & Research, discussed another economic force that needs to be confronted, the increased incidence of fraud. They expound upon some concerning stats, explore why fraud tends to increase during a macroeconomic impact, and examine the solutions to mitigate fraud.

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Macroeconomics and Its Impact on Merchants

As today’s world becomes increasingly interconnected, the macroeconomic impact of events, which deal with the economy at a global level, can be felt down to everyday merchants and their businesses.

Instability within the economy seems to create the perfect breeding ground for fraud, and bad actors stand ready, willing, and able to target the weakest links and take advantage by using the latest technology and sophisticated fraudulent tactics.

“I apologize for leading with all these scary stats,” Thakkar said, “but I wanted to highlight the current macroeconomic state because it not only plays a role in impacting merchant sales and growth, but as we’ve found from history, macroeconomic factors are also known to amplify fraudulent activity. Recession or not, when it comes to the current global macroeconomic climate, things are looking far from ideal.

“The UK right now is experiencing very high inflation. Their customer price index is at over 10% right now. Many of us know that two U.S. banks were recently shut down by regulators. That created two of the largest bank failures in modern history, and the only one larger than that was in 2008. That was at the height of the financial crisis.”

All these looming microeconomic factors are also requiring businesses to make difficult cost-cutting decisions such as mass reduction in forces. And that’s evidenced by the large number of layoffs already reported by corporations. A website called Layoffs.FYI that tracks layoffs has reported over 150,000 layoffs in 2023 alone. That almost surpasses all of 2022 combined.

“All this is leading to impacts on the overall global economic growth,