The US has been identified as the leading country for card fraud, after a new study revealed almost half of global losses to the crime last year occurred in the nation.
This is according to The Nilson Report, which found 48.2 per cent of worldwide plastic card losses – including credit, debit and prepaid cards – took place in the US, amounting to $7.86 billion. This is despite the fact that the country only accounts for 21.4 per cent of global card volumes.
In the US, fraud losses equated to 12.75c for every $100 spent in 2014. This compares with just 3.73c per $100 for the world as a whole.
David Robertson, publisher of The Nilson Report, said there are a range of factors that contribute to this difference, but “nothing mattered more than the lack of an EMV-compliant infrastructure”. This technology offers protection against losses caused by counterfeit cards, which made up almost half of all global fraud last year (49 per cent). Although the US is taking steps to improve its payment infrastructure and encourage EMV compliance, usage rates remain significantly behind those in Europe.
However, it is to be expected that as EMV adoption does take hold in the US, it is likely to have an impact on the nature of fraud in the country. For instance, evidence from other nations that have adopted the technology, such as the UK, suggest that while it will lead to a drop in Cardholder Present fraud, it will increase CNP fraud. To combat this, the payments industry will have to ensure they have highly advanced, flexible fraud detection systems that can analyse vast quantities of data and identify suspicious transactions in real-time.
The Nilson Report noted fraudsters in the US were also able to take advantage of several large-scale data breaches in recent years, which resulted in the financial information of millions of consumers being stolen and offered for sale online.
A total of $16.31 billion is estimated to have been lost to fraud in 2014, of which card issuers absorbed 62 per cent of the losses, with merchants accounting for the remaining 38 per cent. However, The Nilson Report is expecting losses to continue growing throughout the remainder of the decade, reaching an annual total of $35.54 billion in 2020.