Kurv report highlights hidden costs of payments fraud

Businesses face mounting hidden costs from payments fraud that extend well beyond direct financial losses, according to a recent research report published by Kurv. The report, The Growing Burden of Payments Fraud on SMBs, examines how fraud-related expenses increasingly affect merchant profitability, customer trust and operational efficiency as fraud threats continue evolve across the payments sphere.

Kurv said many businesses continue to focus primarily on immediate transaction losses and chargebacks when evaluating fraud exposure, while overlooking broader operational and reputational impacts. These can include increased labor costs tied to fraud investigations, customer support expenses, compliance burdens, technology investments, higher chargeback fees and lost future revenue from damaged customer relationships.

Strained steams, slow growth, scaled attacks

The report noted that fraud-related operational disruptions can strain internal teams and slow business growth. Businesses often must devote additional staff time and technology resources to monitoring suspicious transactions, resolving disputes and responding to evolving fraud threats.

According to Kurv, these indirect costs can accumulate quickly, particularly for merchants operating in digital commerce and subscription-based environments where transaction volumes are high and customer expectations for frictionless payments continue to rise.

Kurv’s analysis comes as fraud continues to increase across digital commerce and real-time payments environments. The report cited growing concerns around account takeovers, business email compromise schemes, synthetic identity fraud and AI-assisted fraud tactics that allow criminals to scale attacks more efficiently.

Strategic business function, not just compliance

The company said fraud prevention is increasingly becoming a strategic business function rather than simply a compliance requirement. Beyond direct financial losses, fraud incidents can undermine customer confidence and contribute to cart abandonment, customer churn and long-term reputational damage.

The report also warned that excessive fraud and chargeback activity can expose merchants to higher payment processing costs and additional scrutiny from acquiring partners and card networks.

Kurv emphasized that payment friction itself can create commercial risks. Legitimate transactions that are incorrectly declined may frustrate consumers, reduce conversion rates and weaken customer loyalty. As a result, businesses must balance security measures with the need to maintain smooth customer experiences.

To address these challenges, the report recommends that organizations adopt more proactive fraud-management strategies, including real-time transaction monitoring, stronger authentication controls, employee education and closer coordination between fraud prevention, operations and customer experience teams.

As payment ecosystems become faster and more digitally connected, Kurv noted, businesses will need more sophisticated approaches to balancing security, operational efficiency and customer experience to minimize both the visible and hidden costs associated with payments fraud.

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