A leading payments expert is warning that Australian banks and other credit card issuers are facing a perfect storm that threatens to slash revenue, margins and public confidence in their cards businesses.With only a few weeks to go until new interchange fees mandated by the Reserve Bank take effect, card issuers are scrambling to reduce costs to stem the impact of declining fee income, balances and revolve rates on their portfolios.But the cost pressures on card issuers are not likely to recede any time soon as soaring fraud rates stoke tensions between financial institutions and merchants.Grant Halverson, a former head of Diners Club's Australian operation and current principal of the McLean Roche Consulting Group, believes banks have been delaying investment in new real-time detection systems that would protect cardholders and merchants against card-not-present fraud.Data published by the Australian Payments Clearing Association (now known as the Australian Payments Network) shows that around 80 per cent of all credit card fraud occurs through card-not-present transactions.The official data shows that in the last decade annual fraud incidents have been growing at a disproportionately higher rate than online card transactions.There were 2.6 million unauthorised transactions on Australian-issued credit cards in the 12 months to June last year worth A$521 million.That equates to a 28 per cent rise from $406 million of fraudulent transactions reported in 2015."The technological solutions are there to improve 'know your customer' protection as online credit card transactions are being approved," says Halverson."The problem is that the banks don't see credit cards as a strategic priority and don't want to make the investment at the moment."Spending on credit cards is continuing to benefit from sharp growth in online retailing, but merchants say they are feeling the pinch of chargebacks that are automatically triggered by their banks when unauthorised card transactions occur."Criminals are moving online in droves and they're leaving us all for dust," says Paul Greenberg, CEO of the National Online Retailers Association."Credit card fraud, especially the rise in card-not-present transactions, is a scourge - it's the big blocker that could render the online retail boom ineffective."NORA is Australia's peak industry representative for almost 6000 online retailers, including corporate heavyweights such as Telstra.Greenberg wants to sit down with banks and other stakeholders to negotiate a joint strategy to combat credit card fraud and review the existing arrangements around who should shoulder the risk of unauthorised transactions."I'm not about bank-bashing but it does seem a little too easy for the banks to hoover back part of the merchant's takings from the day after a fraudulent transaction happens," he says.Halverson suggests the banks will probably have to engage with merchant groups such as Greenberg's organisation because the next generation of fraud prevention technologies will require a high level of integration between merchant websites, the banks' platforms and operating systems of the credit card schemes."The banks are not carrying any credit risks in the ecommerce space and that will remain the case until they put in place technology to reduce fraud," he says."However, when