An increase in credit card transactions and frauds | equensWorldline
Blog / Innovation /

An increase in credit card transactions and frauds

An increase in credit card transactions and frauds

Elena Di Simone

Senior Communications Consultant

27 November 2015

An increase in credit card transactions and frauds

 

According to CartaSi’s recent Forecast Report, Italian household consumption is once again on the increase: forecasts for the current year and for 2016 are positive, confirming that the recovery, which started in 2014, is strengthening and stabilising with a positive trend. In 2015, in fact, credit card purchases will increase by 5.4% on 2014, while, in 2016, there will be a further increase of 5%. In 2014, spending had increased by 3.1% with 82.4 billion Euros transacted via credit cards.

The climate of confidence among citizens, at maximum levels both for personal financial situations and for that of the country’s economy, will lead to a clear increase in spending not only on the online channel, which in 2014 rose by 22.3% actually sustaining the recovery, but also on the physical channel: here, in fact, the growth will be respectively of 2.5% in 2015 and 2.1% in 2016, after 2014 had been characterised by an approach towards positive figures (-0.2% vs. -1.9% in 2013).

A gradual reduction

E-commerce, on the other hand, will experience a gradual reduction, due to a physiological stabilisation of the development phase, but that reduction will only be of a few percentage points per year: +18.9% expected for 2015, +16.1% for 2016.

In the two year period 2015-2016 we will, finally, witness a further push on new technologies. Recently, thanks to CartaSi, Visa Europe and Equens SE, the payment solution HCE (Host Card Emulation) has been launched in Italy which allows payment cards to be displayed on Android smartphones (version KitKat 4.4 or above), irrespective of the telephone operator. Meanwhile, the Bancomat Consortium has launched PagoBancomat Contactless, an additional feature that each bank can decide to offer in the cards of the circuit; this has enabled PagoBancomat transactions to be made on the internet, thereby allowing bank customers to make internet purchases charging their PagoBancomat.

New technologies

The development of new technologies, as well as being a fundamental driver of spending (+14.3% IT and digital goods in 2014, +7.3% and + 5.6% the forecasts for 2015 and 2016), is also contributing to the creation of new consumption and purchasing models, encouraging the use of goods and services and allowing for stronger interaction between supply and demand.

In this context, the development of e-payments is an essential element for the development of the national industry and it allows Italy to come even closer to the more evolved European States. The technological innovation in which market operators are investing is essential in this sense, creating payment solutions in line with the preferences of consumers which allow them to have more effective interactions during purchase processes.

Credit card fraud increased

However, everything that glitters is not gold: according to surveys by the ECB relating to 2013, fraud linked to credit cards in the Single Euro Payments Area (SEPA) has increased considerably. We are talking about 1.32 billion Euros (+8%) – the highest absolute value since 2008.

The ECB survey also highlights the way in which illegal activities are evolving based upon technological transformation and the adoption of new rules within the electronic payments system. In particular, so-called CNP (Card Not Present) fraud has increased by 20.6% on 2012; this fraud occurs on transactions made via the Internet or by telephone, generating a turnover of 958 million Euros – 66% of the total crimes analysed by the European Central Bank.

This type of fraud is likely to increase unless the necessary countermeasures are taken, such as those suggested by the EBA guidelines, as part of payment security on the Internet.

The analyses and recommendations of the ECB are also supported by a recent investigation conducted by the IT consultancy company Fico, based upon Euromonitor International data. According to this investigation, credit card fraud in Europe also increased in 2014, recording a growth of 6%, and 47% of fraudulent international transactions originating from Great Britain occurred in the United States, where there are delays in adopting the EMV standards.

Adoption of EMV standards

Conversely, again according to the findings of the ECB, fraud performed on ATMs and POS dropped respectively by 13.7% and 7.9%. This reduction may be due to the effect of the now almost complete adoption of the EMV standards within the SEPA and the rapid growth of EMV even among terminals active outside the European Union.

Even the recent “Statistical report on payment card fraud”, published by the Ministry of Economy and Finance, confirms the ECB data: the report, which considers the whole of 2014, shows that the value of fraud made with payment cards has undergone a reduction of 2.73% compared to 2013, standing at an average that ranges from €177 to €151. The number of instances of fraud, however, has increased by 11.06%. This means that the criminal fraternity is preferring to multiply and group together transactions, with the aim of eluding the attention thresholds of cardholders and the credit institutions that issue those cards.

The report of the MEF Department of Treasury also confirms that fraud on the Internet using payment cards has increased (+13.36%), while POS and ATMs undergo a reduction (respectively by 18.68% and 17.94%). Among the methods of implementing fraud, the use of the distance camera to steal users’ details has entirely disappeared, together with so-called “cash trapping”. The practice of “skimming” has also drastically declined.