Payment fraud costing more

The cost of payment fraud increased 13 per cent last year, rising from 8.27 cents per $1000 transacted in the year to December 2008 to 9.38 cents in 2009. The Australian Payments Clearing Association released its latest payment fraud survey yesterday and reported a big increase in debit card fraud at point of sale terminals and ATMs resulting from a number of skimming attacks.

APCA estimates that skimming fraud on debit cards increased from $5 million in 2008 to $17.5 million last year.
 
APCA chief executive Chris Hamilton said in a statement that the high number of skimming attacks had continued into the early months of 2010. "However, recent successes in earlier detection and some arrests mean that we anticipate an improvement in the situation over time."

Skimming fraud on credit cards was down from $50.1 to $37.5 million. APCA said that was probably due to the wider application of chip technology.

Card not present fraud on credit cards increased from $72.7 to $88.6 million.

Hamilton sad: "The trend toward CNP fraud and away from skimming fraud is consistent with what happened in the UK in the transition to chip."

APCA's figures cover cheque, debit, credit and charge card payments.

Occurrences of cheque fraud were steady at 0.4 per 100,000 transactions but the cost of the fraud jumped 82 cents to $1.24 per $1000 transacted.

Occurrences of debit card fraud increased from 1.6 to 2.5 per 100,000 transactions and the cost increased from 5.84 to 9.43 cents per $1000 transacted.

Credit and charge card fraud was the big item. Occurrences increased from 24.1 to 32.2 per 100,000 transactions, while the cost fell from 60.35 to 57.15 cents per $1000 transacted.

Since the start of the year all new Visa cards issued in Australia have included smart chips to give greater security. Changes to debit and prepaid cards will follow in 2011. Issuers of Eftpos cards will also include the EMV-standard chip under a program announced last week and due to become the industry standard by 2014.

All non-chip cards currently in use will be replaced so that by 2013 the use of signatures in transactions will be phased out.

Other projects include introduction of chip technology into ATMs.

By 2012 card issuers must enrol all cards for Verified by Visa or its equivalents (such as MasterCard's SecureCode), which provides a password for online shopping. These systems have been voluntary up to now and take-up has been low. By July next year all merchants taking online payments will have to use software that is PCI DSS validated.