Business Reporter: A perfect storm of payment fraud is brewing
This year has seen three distinct trends develop which will have a serious impact on fraud.
Any one of these trends on their own would be concerning to fraud experts and payments professionals, but their convergence could be leading to a perfect storm of fraud.
The first trend is EMV adoption in the US – the country is finally moving to chip-encrypted cards. While this will help slash counterfeit and lost or stolen card fraud in the US, as it has done elsewhere, there can be an expected rise in card-not-present fraud. Criminals will simply seek out other avenues. In the UK, for example, figures from the UK Cards Association show a 58 per cent decrease in card-present fraud in the 10 years since EMV was adopted. But, in the same time period, CNP fraud has risen by 120 per cent. If the US follows the example of the UK, CNP fraud will rocket, with global implications.
Massive data breaches is another worrying trend – 2014 saw more than 1,500 data breaches across the world. This has placed millions upon millions of card details in the hands of criminals, willing to sell them on for less than a 70p a time.
Thirdly, the world is going mobile – M-commerce could exceed £495billion by 2017. Yet Kount’s research shows that more than 40 per cent of merchants cannot detect if a transaction is mobile, even though m-commerce is twice as likely to involve fraud than other platforms.
So we have a situation where CNP fraud is going to rapidly increase, thanks to US EMV adoption and the wide availability of card details on the black market, with merchants not ready to deal with it. Being prepared for this perfect storm must be a priority. How are the security concerns of mobile and contactless payments being addressed?
We recently published the results of an investigation into mobile payment fraud and discovered that 51 per cent of merchants believed mobile to be as risky as other forms of e-commerce. Yet the same survey showed that only 40 per cent of merchants could track fraud by channel. So we have a paradox where merchants do not believe mobile to be a greater risk, while not fully understanding the risks of mobile in the first instance. It could be that because merchants don’t fully understand the extent of mobile fraud, they are not concerned about it – which is a troubling situation.
Source: Business Reporter.
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