Online Payment Processing Fraud And Credit Card Fraud Prevention

Friday, September 15th, 2017

Financial fraud losses in the UK accounted for £768.8m in 2016, which is up 2% in 2015, according to Financial Fraud Action UK (FFA UK). This is the name the financial services industry uses to coordinate its fraud prevention activities. The UK added to some 43% of all card fraud losses across the 19 European countries studied.

Credit Card Hacking

The above-mentioned numbers are related to the losses from scams involving payment cards, remote (internet and telephone) banking and cheques. Importantly, £1.38bn (equivalent to £6.40 in every £10) of fraud in 2016 was prevented.

Credit card hacking has to do with a wide range of crimes, including stealing money from people’s bank accounts using stolen or cloned credit and debit card details. Based on recent research in the field, it’s extremely easy for fraudsters to obtain the details they need to make scam payments on someone else’s credit card.

Having some basic card information, criminals can guess most security codes and expiry dates in less than 6 seconds, according to a Newcastle University study. Then, they use these to make purchases with someone else’s money.

It’s highly important for businesses accepting online payments to be able to fight fraud. With the help of a reputable payment processor offering credit card fraud prevention, online merchants can combat credit card fraud with ease.

Credit Card Fraud. EMV System.

Cases of financial fraud totalled 1.857.506 in 2017. Payment card fraud accounted for the majority of losses at £618m, which is up 9% from £567.5m in 2015. Much of this (£432.3m) was caused by fraudulent e-commerce purchases. According to a 2016 report from the UK Cards Association, about 4 in every 5 pounds at British retailers come from debit and credit cards.

Data breaches and fraudulent online transactions, rather than ATM skimming, cause much of the additional losses in the UK. Some 75% of the lost cash is the result of card-not-present (CNP) fraud, where Card Verification Code (CVC) numbers on the back of cards are not required, of which more than half was found in online transactions.

The EMV migration in the UK began on Feb. 14, 2006, and is considered the largest change to the UK payments market in decades.

As Richard Koch, Head of Policy at the UK Cards Association notes, chip and PIN was introduced a decade ago for the purpose of fighting the growing levels of counterfeit and stolen card fraud in the UK. It accounted for the biggest change to consumer behavior since decimalization and proved to be successful in tackling counterfeit cards and minimizing the threat of fraudsters using lost and stolen cards on the high street.

It has resulted in reduced fraud on counterfeit card and in high street fraud, with annual counterfeit card fraud losses alone down £81.9 million (about $118.2 million) between 2004 and 2014.

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