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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

Fraud: What Happens When EMV Surfaces?

Tracey Black

GFH Group Inc.

Cardware, June 2011

GFH GROUP INC.

worldwide emv deployment and adoption march 2011
Worldwide EMV Deployment and Adoption: March 2011
  • EMV is becoming the payments standard around the globe

GFH GROUP INC.

Source: www.emvco.org

sepa emv compliance deployment 2006 2010
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

annual fraud losses on uk issued cards 1999 2009
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

fraud addressable by chip on uk issued cards 1999 2009
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

uk card losses by fraud type 1999 vs 2009
UK Card Losses by Fraud Type 1999 vs. 2009

GFH GROUP INC.

Source: www.financialfraudaction.org.uk Fraud – The Facts 2010

fraud by location on uk issued cards 1999 2009
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

slide10

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

slide11

Industry Measures to Prevent Payment Card FraudUK

GFH GROUP INC.

Source: www.financialfraudaction.org.uk Fraud – The Facts 2010

slide12

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.

slide14

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

payment card fraud in france 2002 2009
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

annual payment card fraud losses france 2003 2010
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

emv migration milestones mastercard australia
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

emv migration milestones mastercard australia1
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

payment fraud statistics australia 2006 2009
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

potential counterfeit losses in canada 2007 2012
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

potential and actual counterfeit losses in canada 2007 2010
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

fraud addressable by chip in canada 2003 2010
Fraud Addressable by Chip in Canada: 2003 - 2010

Losses (Nominal C$MM)

GFH GROUP INC.

Source: Canadian Banker’s Association; Interac Association; GFH Analysis

credit card counterfeit fraud in canada 2008 2010
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

conclusions
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.

questions

Questions?

Thank You

GFH GROUP INC.