The Wall St. Journal is reporting that fraud related to the sale of virtual goods, primarily in online games, increased to 1.9% in 2009. This compares to 1.1% for physical goods. These numbers are coming from CyberSource Corp., a subsidiary of Visa, which provides payment management services including fraud detection related to the sale of digital goods. (We at Cymbel have no relationship with CyberSource or the other vendors like PayPal mentioned in the article.)

While interesting, these numbers are not surprising. As the article states, many of the precautions that can be used in the physical world, like checking the shipping address against the address on the credit card, are not available in the world of purely digital goods.

So for those selling digital goods, selecting a payment processing provider should be just as much about its fraud detection capabilities as processing fees.