1 in 10 New Merchants Hit by Fraud Within 90 Days, Fraudio Data Reveals

New data reveals that one in ten newly observed merchants experiences fraud within its first 90 days of trading. For fintech professionals and payment providers, this highlights a critical vulnerability: fraudsters are increasingly targeting businesses before they have established a baseline of legitimate transaction history, making traditional pattern-recognition models less effective during the high-risk onboarding phase.

What was announced

Fraudio conducted an analysis of a global dataset comprising a sample of more than 127.5 million transactions recorded between January 2025 and April 2026. The study focused on a cohort of 3,923 merchants whose first transaction occurred during 2025 and had no prior history in the data. The findings show that 10.5% of these merchants encountered at least one fraud-labelled transaction within their first 90 days of operation.

The speed at which these attacks occur is significant. For affected merchants, the median time from their first transaction to the first instance of fraud was 33 days. A quarter of these businesses faced fraud within just nine days, while 47% experienced it within the first month. When adjusted for time bands, the rate of first-time fraud during the initial week was nearly three times higher than the daily rate observed between days 31 and 90. Furthermore, the fraud rate per transaction was 2.9 times higher during a merchant's first 90 days compared to payment programmes that have been active for more than a year.

The analysis also demonstrated the limitations of isolated transaction monitoring. Based solely on amount, currency, and channel, 82% of fraudulent transactions appeared unremarkable, nearly identical to the 84% of legitimate transactions that shared those same attributes. However, historical card behavior proved more telling; 30% of fraudulent transactions involved a card previously connected to fraud, compared to only 0.075% of legitimate payments.

"Fraudsters don't wait for a business to build six months of transaction history before they begin attacking it. Our data shows that the opposite can happen as fraud can emerge within days, at exactly the point when a merchant has the least historical information available to understand what normal behaviour looks like."

João Moura, CEO and Co-Founder of Fraudio.

The companies involved

Fraudio is an AI-powered fraud detection company that focuses on providing scalable solutions for payment companies and merchants to combat financial crime. The firm utilizes centralized AI models that leverage global datasets to identify fraudulent patterns that might be invisible to individual merchants or rules-based systems. In June 2026, the company successfully raised new funding in a round led by Alea Capital Partners to scale its proprietary detection technology. This capital injection followed the strategic appointment of Robert Kraal, a recognized payments pioneer, to the company’s Board of Directors earlier that month.

The company’s market position is defined by its focus on "context-driven" fraud prevention, which attempts to solve the "cold start" problem for new merchants by using historical connections between transactions across its wider network. By tracking how different entities and cards are connected globally, the firm aims to identify high-risk activity even when a specific merchant has not yet accumulated enough transaction history to establish reliable patterns of legitimate customer behavior.

What FF News has reported before

FF News has documented Fraudio’s technological expansion and corporate growth throughout 2026. In September, we reported that enza and Fraudio Launch enzaGuard to Bolster AI Fraud Protection Across Africa, marking a significant move into the African payments market. This followed a report in June where Fraudio Exposes 25% Surge in Payment Fraud Driven by Coordinated Network Attacks, highlighting the rising threat of organized criminal groups.

The publication also covered the company's internal milestones, including when Fraudio Raises New Funding Led by Alea Capital Partners to Scale AI Fraud Detection. Additionally, the strengthening of the firm's leadership was noted when Fraudio Appoints Payments Pioneer Robert Kraal to Board of Directors, signaling a push for deeper industry expertise during its scaling phase.

What this means

The industry is facing a "cold start" crisis where traditional risk management fails exactly when merchants are most vulnerable. This data places significant pressure on Payment Service Providers (PSPs) and acquirers who still utilize static thresholds or merchant-specific rules. If 82% of fraudulent transactions appear unremarkable in isolation, the sector must pivot toward collective intelligence and graph-based analysis that tracks card behavior across the entire ecosystem rather than within a single merchant silo. The disproportionate risk faced by early-stage businesses suggests that the standard "probationary period" for new accounts is being actively exploited by sophisticated actors who recognize the lack of historical context.