Thursday 18th July, 2013

According to a new report by the European Central Bank (ECB), since 2007 Card fraud has been on a declining trend, thanks to technological advances that are making transactions safer. However, fraud is migrating to countries where the technology remains less developed.

The second report compiled by the ECB and 17 national banks in the euro area, looks at fraud using different kinds of cards and according to type of usage.

During 2010 and 2011 there was a decrease in the value of fraud, despite growing card usage in the Single Euro Payments Area (SEPA). The total amount of fraud amounted to €1.16 billion in 2011, representing a decrease of 5.8% since 2010.

In 2011, 56% of the value of fraud resulted from card-not-present (CNP) payments – i.e. payments via post, telephone or the internet – while one-quarter resulted from point-of-sale (POS) terminals and about one-fifth from ATMs.

Improvements in the security of cards and in the underlying payment infrastructure are the main reason for a slowdown in growth of ATM fraud, as well as in the more than 24% drop in fraud carried out at POS terminals.

The most significant improvement was the more widespread adoption of EMV, a chip-based security standard that is much safer than conventional magnetic stripes.

However, this trend has partially shifted the problem to countries where chips are not yet prevalent. In 2011 some 78% of all fraud with counterfeited cards was carried out in non-SEPA countries, up from 61% in 2010. With fraud involving ATMs, 95% of all counterfeited card fraud occurred outside SEPA, up from 67% in 2010. Counterfeit fraud uses information on the magnetic stripe to make a copy of the card.