The content of this article is provided for informational purposes only. You should always obtain independent business, tax, financial, and legal advice before making any business decision.
Merchants are fighting fraud and false declines at the same time, but many still measure only the cost of fraud, not the cost of blocking good customers.
This is the first in a two-part series on fraud Part 2 highlights PayPal's fraud protection solutions.
False declines carry their own costs: lost transactions, damaged relationships, and often legitimate buyers who don't come back.
U.S. merchants now lose $5.13 for every $1 of fraud, and 68% say fraud-related friction has caused them to lose customers, good ones included.1
That is why fraud management is no longer just a defensive function. It is increasingly a business enablement capability.
Many fraud tools promise better fraud reduction and savings. The harder problem for merchants is decisioning: distinguishing real risk from legitimate demand without compromising approvals.
Accuracy is key: making better fraud decisions without making growth harder. The broader market is clearly feeling this tension: 45% of enterprise leaders do not believe their current payment technology can help them compete today.2
This is where fraud decision precision matters. Precision comes from having more context than a single transaction can provide.
PayPal's fraud models draw on two sources of context at once: signals about the buyer behind the purchase and merchant-side transaction patterns across our network. These can include spending patterns, device signals, and behavioral history. Merchant context helps sharpen those signals further, including seasonality, business priorities, and risk tolerance.
For example, an overseas transaction that might look suspicious in isolation can be recognized as legitimate when buyer signals, such as recent travel-related purchases and seasonal spending patterns, tell a fuller story.
PayPal's network includes 439 million active consumer and merchant accounts3, 12.8 billion digital identifiers4, and $1.79 trillion in annual payment volume.5 Taken together, that scale and visibility help merchants make more precise fraud decisions by better distinguishing good customers from genuine risk.
That same intelligence foundation underpins PayPal's fraud protection solutions, helping merchants find the approach that fits how they operate.
Fraud is not isolated from the rest of the business. It affects approvals, conversion, customer experience, and long-term value. The goal is not simply to stop more bad transactions. It is to make better decisions.
The right fraud approach depends on how a business operates, the level of control it needs, and how it balances risk reduction with customer friction.
Merchants with limited internal fraud resources need something very different from large enterprises with dedicated risk teams and advanced control requirements. Even so, both are solving for the same underlying challenge: how to reduce risk without limiting growth.
For merchants evaluating where to start or what comes next, exploring PayPal's fraud protection solutions can help clarify what level of control, insight, and flexibility best fits their business.
In Part 2 of our fraud protection series, explore how PayPal's proven Fraud Protection Advanced offering and new Fraud Protection Lite fit different business needs.