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Fraud: What Happens When EMV Surfaces?

Fraud: What Happens When EMV Surfaces?. Tracey Black GFH Group Inc. Cardware , June 2011. GFH GROUP INC. Worldwide EMV Deployment and Adoption: March 2011. EMV is becoming the payments standard around the globe. GFH GROUP INC. Source: www.emvco.org.

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Fraud: What Happens When EMV Surfaces?

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  1. Fraud: What Happens When EMV Surfaces? Tracey Black GFH Group Inc. Cardware, June 2011 GFH GROUP INC.

  2. Worldwide EMV Deployment and Adoption: March 2011 • EMV is becoming the payments standard around the globe GFH GROUP INC. Source: www.emvco.org

  3. SEPA EMV Compliance, Deployment : 2006-2010 • SEPA compliance requires EMV migration by December 31, 2010 Percent of Total GFH GROUP INC. Source: www.ecb.int/paym/sepa/about/indicators/html/index.en.html - European Central Bank SEPA Indicators EMV Readiness

  4. United Kingdom

  5. Annual Fraud Losses on UK-Issued Cards: 1999-2009 609.9 535.2 504.8 439.4 440.3 424.6 420.4 427.0 411.5 317.0 Annual Plastic Card Fraud Losses UK (Pounds MM) 188.4 Liability Shift – January 1, 2005 GFH GROUP INC. Source: www.financialfraudaction.org.uk Fraud – The Facts 2010

  6. Fraud Addressable by Chip on UK-Issued Cards: 1999-2009 “The introduction of chip and PIN means that lost and stolen card fraud is now at its lowest level since the collation of industry losses began in 1991.” 31% -6% 9% -13% 12% 61% 20% -24% -10% Fraud Losses UK (Pounds MM) -56% Percent of Total Fraud 69% 66% 67% 60% 53% 48% 42% 39% 37% 37% 22% GFH GROUP INC. Source: www.financialfraudaction.org.uk Fraud – The Facts 2010

  7. UK Card Losses by Fraud Type 1999 vs. 2009 GFH GROUP INC. Source: www.financialfraudaction.org.uk Fraud – The Facts 2010

  8. Fraud by Location on UK-Issued Cards: 1999-2009 Fraud Abroad fell by almost 50% in 2009, partly due to the banks’ fraud detection systems. The countries where fraud is occurring on UK-issued cards have changed markedly over the past five years, since other countries began using chip and PIN. 609.9 535.2 504.8 424.6 439.4 440.3 420.4 427.0 411.5 Fraud Losses UK (Pounds MM) 317.0 188.4 GFH GROUP INC. Source: www.financialfraudaction.org.uk Fraud – The Facts 2010

  9. Top 5 Countries for UK Fraud Abroad: 2006-2009 The proportion of total fraud abroad losses in the USA increased from 14% in 2008 to 17% in 2009. Fraud on UK-issued cards in Australia and Canada also decreased significantly – by 53% and 46% respectively – due to these countries introducing chip and PIN. GFH GROUP INC. UK –issued cards or card details used fraudulently overseas Source: www.financialfraudaction.org.uk Fraud – The Facts 2010

  10. Industry Measures to Prevent Payment Card FraudUK GFH GROUP INC. Source: www.financialfraudaction.org.uk Fraud – The Facts 2010

  11. UK Industry Measures to Prevent Payment Card Fraud cont’d • DCPCU (Dedicated Cheque and Plastic Crime Unit) • Special police unit sponsored by the banking industry • FISS (Fraud Intelligence Sharing System) • Established in 2008, allows the banking industry to share information on confirmed, attempted and suspected fraud using a centralized database • NFIB (National Fraud Intelligence Bureau) • Payments industry and City of London police work together to reduce fraud leveraging data from FISS • IHCF (Industry Hot Card File) • Database containing information on more than 6MM cards; 60,000 retailers subscribe to this electronic file • Participating retailers check all transactions against the file. Increasingly used by CNP merchants • Prevented more than 900,000 cases of attempted fraud in 2008 and 2009 • CIFAS (The UK’s Fraud Prevention Service) • More than 265 members across multiple industries (banking, credit cards, asset finance, retail, credit, mail order, insurance, telecommunications, factoring, share dealing) share information about identified frauds GFH GROUP INC.

  12. France

  13. GFH GROUP INC. http://ec.europa.eu/internal_market/payments/docs/fraud/taiex_seminar/sarazin.pdf Initiatives of the ECB Card Fraud Prevention Task Force, March 8th 2006

  14. Payment Card Fraud in France 2002-2009 Annual Payment Card Fraud Losses (Euros MM) Liability Shift – January 1, 2005 GFH GROUP INC. Source: Observatory for Payment Card Security 2003-2009 Reports

  15. Annual Payment Card Fraud Losses, France: 2003-2010 • Although overall fraud is increasing, fraud addressable by chip is decreasing • Fraud migration to CNP and increases in foreign fraud are very apparent Annual Payment Card Fraud Losses France (Euros MM) Liability Shift – January 1, 2005 GFH GROUP INC. Source: Observatory for Payment Card Security 2003-2009 Reports; GFH Analysis

  16. Australia

  17. EMV Migration Milestones MasterCard - Australia MasterCard • October 2011: All new and reissued MasterCard cards issued by Australian banks must be EMV capable, with all Point of Sale terminals EMV compliant by April 2012* • April 2013: All cards and payment terminals will need to be EMV capable • April 2013: Online merchants must provide either MasterCard SecureCodeAuthentication or the equivalent for transactions over $200 • At the end of 2015, all ATMs in Australia must be EMV enabled GFH GROUP INC. Source: www.mastercard.com *This means that from this date the non-EMV party will be liable for any resulting fraud

  18. EMV Migration Milestones MasterCard - Australia Visa • All Visa cards to be issued on chip by April 1, 2013 • Signature no longer accepted from April 1, 2013 • All merchant acceptance terminals must be chip-activated by April 1, 2012 • All new ATMS deployed after January1, 2011 must be chip-capable • All Visa cards must be enrolled in Verified by Visa by April 2012 • All merchants who take online transactions must check the CVV2 by January1, 2011 GFH GROUP INC. Source: www.visa.com

  19. Payment Fraud Statistics Australia: 2006 - 2009 • The latest industry data shows that counterfeit fraud in Australia dropped by 45% between June 2009 and June 2010 GFH GROUP INC. Source: Australian Payments Clearing Association Ltd. www.apca.com.au

  20. Canada

  21. Potential Counterfeit Losses in Canada: 2007-2012 • The fraud forecast in Canada from 2006 was gloomy Losses (Nominal C$MM) GFH GROUP INC. Source: Canadian Banker’s Association; Interac Association; GFH Analysis

  22. Potential and Actual Counterfeit Losses in Canada: 2007-2010 • Although the liability shift is not yet reflected in these numbers, Canada has already seen declines in fraud addressable by chip and PIN Losses (Nominal C$MM) GFH GROUP INC. Source: Canadian Banker’s Association; Interac Association; GFH Analysis

  23. Fraud Addressable by Chip in Canada: 2003 - 2010 Losses (Nominal C$MM) GFH GROUP INC. Source: Canadian Banker’s Association; Interac Association; GFH Analysis

  24. Credit Card Counterfeit Fraud in Canada: 2008-2010 • CBA is now tracking cross-border counterfeit fraud Losses (Nominal C$MM) GFH GROUP INC. Source: Canadian Banker’s Association; GFH Analysis

  25. Conclusions • EMV is truly becoming the global payment standard • The positive impact of EMV on reducing counterfeit and lost/stolen fraud has been consistently demonstrated • Later adopters of EMV are less likely to see migration to CNP fraud due to the introduction and adoption of enhanced security measures to address this type of fraud • Robust fraud tracking is an indisputable asset that supports more accurate business decision making • The UK is a clear leader in fraud reporting, and in industry coordination to address payment card fraud • Early EMV adopters are becoming less tolerant of foreign fraud and implementing stronger measures to address foreign fraud, despite possible increased impact to cardholders GFH GROUP INC.

  26. Questions? Thank You GFH GROUP INC.

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