Global fraud rises again

Figures from this month’s Nilson Report show that global card fraud figures reached $21.84bn in 2015 and is predicted to keep rising. These fraud losses come from a number of sources including counterfeit card fraud, CNP fraud, “friendly” fraud and fraudulent applications.

Ecommerce continues to boom across the world at unforeseen rate. WorldPay recently predicted that global ecommerce figures would hit $2.4tn by 2019. It’s an incredible prediction but if recent history is anything to go by, that figure will no doubt be higher by 2019.

There does then, seem to be a dichotomy in ecommerce. Fraud is growing at a huge rate but it is not impacting on the growth of ecommerce. Consumers are still flocking to laptops and mobile to shop, transact and live their financial lives. It would seem that fraud is not having an impact on the popularity of ecommerce. At least, not yet.

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EMV and the new avenues of fraud

It has nearly been a year since the 1 October 2015 US liability shift deadline for US credit card companies and merchants to switch to EMV cards. Despite concerns about costs and the challenges of roll out on such a huge scale. EMV adoption has rapidly increased. MasterCard has announced that 80% of its credit cards now have chips, while it has 1.7 million chip-active merchant locations on its network.[1]

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Fighting CNP fraud through simple yet strong authentication

Our transactions are becoming increasingly cashless. Consumers are increasingly preferring alternative payment methods as they are often easier and faster to use than traditional methods. Our debit and credit cards now allow us to shop online anywhere we are or to send money to the other side of the globe with a few clicks.

However, the flipside to this boom in online commerce has been a correlating boom in online fraud. Card-not-present (CNP) fraud has been on the rise globally; in the UK alone CNP fraud increased by 20% in 2015.[1] Current authentication solutions used by banks and financial institutions are not effectively solving this issue. One-time-passwords are often used but are vulnerable to attack by sophisticated cyber fraudsters, by using malware and exploiting the vulnerabilities of the SMS network.[2] 3DS is also used as a fraud prevention method, however the user experience can be poor and many retailers end up turning it off as the cost of lost revenue from people abandoning their order through frustration is often greater than fraud rates.

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The Rise and Rise of PIN: A Decade of Acceptance

It is now 10 years since Chip and PIN became the gold standard of authentication for face to face transactions. Chip & PIN, refers to cards which use the EMV protocol. Payment data is stored on an integrated circuit (the chip) rather than the traditional magnetic strips, making the cards near impossible to clone. Its ease of use and proven effectiveness in combating card fraud has made it central component of our payments experience.

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