Hey there, big moves this week! 👋

AI-powered scams are on the rise, with fraud now making up 23% of all fraudulent transactions. Mastercard and Feedzai are teaming up to fight back with AI-driven fraud detection, already reducing scam losses by 12% in the UK.

Meanwhile, 63% of SMBs are turning to word-of-mouth marketing to fuel growth, while Gen Z and millennials are getting instant refunds through Reshop—reshaping the returns process in eCommerce.

Let’s break it all down!

ECOMMERCE AI DIGITAL PAYMENTS

Mastercard and Feedzai Join Forces to Combat AI-Powered Scams

Fraudsters are increasingly using AI to deceive consumers, costing over $1 trillion last year. Mastercard and financial crime prevention firm Feedzai are tackling this head-on with a new partnership to protect financial institutions worldwide.

Mastercard will integrate Feedzai’s AI-driven fraud detection platform into its Consumer Fraud Risk (CFR) solution. This tool helps banks detect and prevent scams in real time, particularly in account-to-account transactions. Since launching in the U.K. in 2023, APP scam losses have dropped by 12%.

Key insights:
🔹 Scams now account for 23% of all fraudulent transactions, surpassing digital payment fraud.
🔹 71% of financial institutions are using AI to fight fraud, up from 66% in 2023.
🔹 Feedzai’s platform processes over $8 trillion in transactions annually, protecting 1B+ consumers.

With fraud growing at an alarming rate, AI-driven prevention is becoming essential. Expect to see more financial institutions adopting these tools to stay ahead of scammers.

SPONSORED BY OMNISEND

THE MOST BORING MARKETING TACTIC. 

Let’s be real. Email marketing is not the “sexiest” member of the marketing family. And that’s okay. As a business owner, you have enough “exciting” stuff happening. Who wants more excitement when you can have stable and effective instead? Let us be boring, in the best way possible.  

• No guessing whether that marketing campaign will pay off. Brands using Omnisend on average make $73 for every $1 spent.* 

• No need to learn anything new here. A platform so boringly intuitive, it’s like you designed it yourself. 

• No venturing into the great unknown. Our support team is available 24/7 to make sure you don’t have any unwanted adventures.

• Same same, but for less. Get everything you expect from other platforms, except for those rollercoaster prices that make your heart race.

Check out Omnisend and take a nap

ECOMMERCE DIGITAL PAYMENTS

62% of Credit Card Outsiders Use Alternative Credit Products

A new PYMNTS Intelligence report reveals that 62% of credit card outsiders—those who have never had a credit card or let their cards lapse—are turning to alternative credit options like store cards and buy-now-pay-later (BNPL) services. These alternatives, which provide short-term, low-commitment solutions, are especially appealing to those with low credit scores.

Key Findings:

• Store cards and BNPL plans are the most popular alternatives, meeting the needs of second chancers (who previously had a credit card) and the credit curious (who are interested but have never owned one).

• Secured cards topped the list of desirable products, with 29% of outsiders expressing interest. Traditional credit cards followed closely at 28%, while BNPL services garnered 27%.

However, challenges remain. 33% of outsiders cited upfront deposit requirements as a significant barrier, while others struggled with high interest rates and lack of flexibility. Overcoming these issues could open the door for financial institutions (FIs) to offer more accessible, flexible solutions to bring outsiders back into the credit market.

ECOMMERCE TRENDS

Refunds, Right Now: Reshop Targets Gen Z and Millennial Shopping Pain Points

Anthony Eisen, co-founder of Afterpay, is now shaking up the returns process in eCommerce with Reshop—a platform designed to address Gen Z and millennial shoppers’ anxieties about returns. Reshop offers instant refunds to shoppers using debit cards, improving customer satisfaction and encouraging repeat purchases.

Key Insights:

• Instant refunds: Shoppers can receive immediate returns, which are instantly available on a virtual Reshop card for use at any retailer accepting Visa debit cards.

• Appealing to younger generations: This solution is especially tailored for debit card users who want to avoid credit card debt and manage cash flow effectively.

• $600 billion in U.S. returns: Reshop targets the logistical nightmare of returns, which cause losses, fraud, and stock delays for retailers.

The $17 million in new funding positions Reshop to transform the returns space, enhancing the experience for both consumers and retailers by offering faster refunds, reducing friction, and building customer loyalty.

ECOMMERCE AI

AI Is Changing Buying Behavior, Study Finds

A Capgemini Research Institute report reveals that artificial intelligence is revolutionizing how consumers discover products and make purchasing decisions. With insights from 12,000 consumers across multiple countries, the study highlights key shifts in product discovery, shopping behavior, and brand loyalty.

Key Findings:

• GenAI (like ChatGPT) has largely replaced traditional search engines for product recommendations, with two-thirds of Gen Z, Millennials, and Gen X preferring it over Google.

• Social media is a major driver of discovery, with 32% of consumers purchasing products through social platforms and 68% of Gen Z discovering new brands there.

• Quick commerce is on the rise: Two-thirds of consumers value fast delivery options, such as 2-hour or 10-minute delivery windows.

• Brand loyalty is weakening, with consumers increasingly switching brands. Retailers must leverage genAI tools, enhance pricing strategies, and tap into social media to stay competitive.

The shift toward AI-powered shopping is shaping the future of eCommerce, pushing brands to innovate and meet evolving consumer expectations.

ECOMMERCE TRENDS

63% of Small Businesses Bet Big on Word of Mouth for New Customers

Small- and medium-sized businesses (SMBs) continue to thrive by leveraging word of mouth as a key driver of growth, with 63% of SMBs attributing their success to organic referrals from satisfied customers. The latest PYMNTS Intelligence SMB Growth Report highlights the importance of customer loyalty and engagement, particularly for long-established SMBs that rely on deep community ties and brand recognition.

Key Insights:

• Newer SMBs are growing rapidly, especially through digital marketing and eCommerce platforms, with 85% of them reporting customer base expansion in the past year.

• Older SMBs benefit from years of loyal customers, with 74% of them citing word of mouth as a key factor in growth.

• SMBs focusing on online sales are seeing higher growth, with 80% of them expanding their customer base compared to 67% of in-store sellers.

• Customer satisfaction and engagement remain crucial, with businesses that combine traditional strengths with modern digital tools having the best chance of long-term success.

SMBs that successfully blend digital innovation with customer relationship-building are set to thrive.

Signing off,

The Merchant @CartHustle