Financial Crime World

Fraud Rates in Payment Systems Continue to Decline, But International Transactions Remain Prone to Fraud

The Observatory for the Security of Payment Means has released a report revealing that fraud rates in payment systems have continued to decline globally, with some notable exceptions. According to the report, the total fraud rate for domestic card transactions fell by 18% in 2022, reaching a new all-time low.

International Transactions: A Prone Target

However, international transactions, which account for only 9% of total transactions, remain more vulnerable to fraud. In 2022, these transactions accounted for almost 43% of cashless payment fraud, up from 38% in 2021. The report notes that international card transactions are structurally more prone to fraud due to the use of remote payments and less robust technologies.

The study found that:

  • Remote Payments: The channel with the highest fraud rates is remote payments, which account for 64% of all fraud.
  • Internet Payments: Internet payments, a significant subset of remote payments, accounted for 55% of fraud in 2022. However, the fraud rate for internet payments fell by 27% compared to 2021, thanks to the widespread introduction of strong authentication measures.
  • Domestic Card Payments Over the Internet: The report highlights trends in fraud rates for domestic card payments over the internet, with various sectors experiencing different levels of fraud. For example:
    • Generalist and Semi-Generalist Trade Sector: Accounted for 21% of all fraud.
    • Travel and Transportation: Accounted for 10%.

Recommendations

The Observatory’s findings suggest that the payment industry has made significant progress in reducing fraud rates, but there is still work to be done to ensure the security and integrity of international transactions. To combat fraud effectively:

  • Implement Strong Authentication Measures: Continue to implement strong authentication measures in international transactions.
  • Enhance Monitoring and Detection Capabilities: Enhance monitoring and detection capabilities to identify and prevent fraudulent activity.
  • Educate Consumers: Educate consumers on the importance of secure payment practices, such as using secure websites and verifying the authenticity of online retailers.

Key Statistics:

  • Total fraud rate for domestic card transactions fell by 18% in 2022.
  • International transactions accounted for almost 43% of cashless payment fraud in 2022.
  • Remote payments account for 64% of all fraud, with internet payments accounting for 55%.
  • The fraud rate for internet payments fell by 27% compared to 2021.
  • Generalist and semi-generalist trade sector accounted for 21% of all fraud.