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Economic turmoil is affecting markets worldwide, and policy-change discussions are taking place in various countries that could drastically alter how credit card issuers operate. Though important and potentially far-reaching, these issues will fade over time. Payments fraud is a constant that no government intervention or policy can tackle effectively.
Indeed, as this month's cover story by Cards&Payments Senior Editor Nadia Oehlsen points out, now more than ever players in the payments industry are working together and with law enforcement to address a problem that not only is growing but shifting to areas and places where crooks are most effective.
Recent indictments by U.S. grand juries of alleged crooks operating in different countries show that such international cooperation can be effective. Unfortunately, some mistrust continues, and some of the systems created to help combat fraud have been only marginally effective.
France, for example, which has adopted the EMV chip-and-PIN system to fight card-present fraud, simply has seen its card fraud shift to card-not-present environments where the chip is ineffective. The same is true for the United Kingdom and other countries that have adopted EMV.
In the UK, the card-not-present fraud problem on domestically issued cards is much bigger than in other European countries, reaching £290 million last year, up 37% from the previous year. Comparatively, card-present fraud in the UK rose just 1%.
Fear of losing the sale is among the main reasons many Web merchants have not embraced the so-called 3D Secure systems that Visa and MasterCard have adopted to fight Internet fraud, even though participation shifts the fraud liability to the issuer. Consumers also have not embraced the systems, figuring the liability is not theirs when using a credit card because it's the issuer's money that is at risk.
Law enforcement, so it seems, will play perhaps the biggest role in combating card-related fraud. But it will require a collaborative effort that works effectively.
Jeffrey Green
Editor-in-Chief
Cards&Payments
