Card fraud losses continue to spike as criminal groups innovate new methods to steal from consumers. As a result, consumers and businesses globally continue to account for massive losses from card fraudulent activities.
Data presented by Buy Shares indicates that Europe’s card fraud value has hit Є1.55 billion with the United Kingdom accounting for almost half at 45.36%. The UK’s value stands at Є706.9 million. From the data, Romania has the least card fraud value at Є2.9 million.
The research also overviewed the distribution of fraud losses on UK-issued debit and credit cards based on type. Remote purchases accounted for the largest share at 76%. On the other hand, card not received accounts for the least share at 1%.
eCommerce fuelling card fraud in Europe
The United Kingdom accounts for the highest fraud cases considering that it’s one of the significant card markets based on volumes and values of card transactions. The high value, of fraud, is a result of a high level of using cards for online purchases.
From the data, the Card not Present (CNP) fraud continues to gain popularity in a period most customers are turning away from using their physical cards and simply enter their details to make a purchase. Notably, CNP fraud has become more popular with the growth of eCommerce and the increased security around other types of fraud.
One notable source of CNP fraud has been the malware and phishing attacks that have become increasingly sophisticated. In Europe, most cards come with an EMV chip which requires a PIN to be entered into the merchant’s terminal for payment authorization. However, a PIN isn’t required for online transactions, posing a perfect avenue for fraudsters.
Besides the fraud emanating from growing eCommerce, emerging and alternate payment options like contactless payment continue to drive innovation within criminal groups to enable them to abuse new technologies. However, mew card-less payment methods may also result in a downwards trend in card fraud.
The role of criminal groups has also been taking center stage in rising card fraud. Such groups use a wide range of methods like the collection of data, threats, and bots. Most groups have perfected the art of social engineering and data breaches to steal personal data. The stolen data is used to commit fraud both directly and indirectly like making unauthorized purchases online. Personal details are also used to take over an account or apply for a credit card in someone else’s name.
How institutions are combatting card fraud
From a market perspective, both payment service providers and card payment scheme operators have put in place a wide range of fraud prevention and detection security tools. Notable features include card tokenization intending to bring fraud rates down as well as offer new payment features on portable devices, like mobile phones. Banking regulators over the recent years have strengthened the security requirements for electronic payments like revising the Payment Services Directive (PSD2). The requirements were later revised once again to enhance strong customer authentication and common and secure open standards of communication.
Furthermore, card issuers continue to maintain several countermeasures, like software that can estimate the probability of fraud. For instance, a large transaction occurring a great distance from the cardholder’s location might seem suspicious. In this case, the merchant may be directed to call the card issuer for verification or to decline the transaction. Consequently, payment institutions need mandatory active risk management to fight online fraud on the internet and mobile devices. Furthermore, fraud and risk prevention services must adopt anti-fraud measures daily.
As highlighted, the increased card fraud has been elevated by the increasing use of cards for payments. However, most providers and banks are now pushing consumers to mobile apps, which are more secure than web-based payment applications.
In general, payment companies need to deploy multiple techniques to prevent fraud like machine learning and behavior analytics to identify unknown behavior on accounts. There is also the need to set up rules that target known threats and behaviors that could indicate fraudulent activity. Combining the mentioned techniques will create a hybrid monitoring solution. There is a need for cross border cooperation like the use of integrated fraud and risk prevention services. The services incorporate modern modeling techniques.