U.S. Fraud Detection Software Demand Soars as Payment Frauds and Cyberattacks Intensify Nationwide

According to the latest market research study published by P&S Intelligence, the U.S. fraud detection software market continues its rapid ascent, reaching a value of USD 6.6 billion in 2024 and projected to soar to USD 23.9 billion by 2032, advancing at a CAGR of 17.6% between 2025 and 2032. This impressive momentum stems from the escalating sophistication of fraud, rising digitization across industries, and strict regulatory frameworks that push enterprises to strengthen their security posture. As digital ecosystems expand, organizations are increasingly recognizing the urgency of deploying solutions capable of addressing evolving fraud techniques.

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A key market driver is the surge in digital transactions, which has amplified both the frequency and impact of fraud incidents. The accelerated adoption of online shopping and digital wallets has increased vulnerabilities, allowing hackers and scammers to exploit system weaknesses. At the same time, cyberattacks, identity theft, and payment fraud remain significant threats to consumers and businesses alike, making advanced detection systems indispensable in safeguarding financial and personal data.

Technological innovation further fuels market expansion. Fraud detection tools powered by AI, machine learning, and behavioral analytics enable exceptional precision by analyzing user patterns, detecting anomalies, and predicting potential future attacks. Regulatory standards such as GDPR and PCI DSS continue to reinforce security mandates, compelling organizations to adopt robust fraud prevention solutions that offer real-time protection, compliance, and reduced exposure to financial penalties.

Key Insights

• The growing use of behavioral analytics is reshaping fraud prevention, with solutions increasingly tracking typical user transaction patterns to detect anomalies such as unusual purchase amounts, irregular locations, or unexpected login activity.
• Real-time behavioral monitoring helps identify suspicious actions early, preventing unauthorized transactions without disrupting legitimate user behavior.
• The expansion of online shopping and mobile wallet usage is a major contributor to fraud growth, with U.S. consumers spending USD 308.9 billion online in Q4 2024, up 2.7% from the previous quarter.
• Rising digital payment adoption is creating more vulnerabilities, attracting cybercriminals who exploit gaps in mobile wallets, online storefronts, and PoS transactions.
• Businesses face increasing threats, including stolen credit card misuse, fake account creation, account takeovers, and refund fraud, prompting heightened investment in advanced detection tools.
• Fraud detection systems now perform real-time monitoring and pattern recognition to identify suspicious activities before financial losses occur.
• Software accounts for 65% of the market in 2024 due to strong demand from retail and banking enterprises that rely on ML-based and behavior-driven detection capabilities.
• Services represent the fastest-growing component category, driven by the need for consulting, implementation, and ongoing system optimization to counter emerging fraud patterns.
• On-premises solutions lead deployment trends, especially in BFSI, healthcare, and defense sectors that prioritize stringent data control and compliance.
• Cloud-based deployment is the fastest-growing model, advancing at a 17.9% CAGR, supported by remote accessibility, real-time updates, and cost efficiency.
• Large enterprises dominate the market due to their extensive operations, broader attack surface, and capacity to invest in high-performance fraud detection infrastructure.
• SMEs form the fastest-growing organizational segment as they increasingly adopt scalable, cloud-powered solutions to protect against rising fraud risks.
• Payment fraud detection is the largest application area, reflecting the need to secure credit card transactions, prevent unauthorized payments, and combat refund fraud.
• Cybersecurity and data breach prevention is the fastest-growing application, with a CAGR of 18.0%, owing to rising cyberattacks targeting sensitive business information.
• BFSI remains the largest industry segment, representing 35% of the market in 2024, as financial institutions face relentless attacks due to the high value of customer data.
• Retail and e-commerce is the fastest-growing industry, fueled by the post-pandemic surge in online shopping and growing threats involving account takeovers and return fraud.
• The Northeast is the largest regional market, holding around 45% share in 2024, supported by a concentration of financial, IT, and government entities that require robust protection.
• The South is the fastest-growing region as businesses across retail, telecom, and healthcare adopt fraud detection solutions to combat rising digital transaction volumes.
• Market fragmentation persists due to the presence of numerous specialized providers offering ML-based, behavioral, and industry-specific fraud detection solutions.
• Despite fragmentation, several major players maintain strong market influence through advanced technologies and broad portfolios that appeal to large organizations.