Antifraud systems and security payments

What is fraud?

What is fraud?

15-20 years ago, credit cards were rareness thing for the vast number of people around the world. And this product was accustomed with some skepticism. But times have changed and technological progress has burst into our lives and firmly settled there.

Nowadays it is impossible to surprise anyone with a Bank card, and the enormous opportunities offered by this product attract the masses. The Bank card is so widely applicable that we have forgotten about the mood it was met with.

Payment card is a financial instrument that is constantly being improved, as well as the scope of their use is increasing. Simultaneously with the increasing of using of the Bank cards, with the development of e-Commerce the growth of the amount of fraud does not stop. We will explain in this article what card fraud means, we will talk about basic types of fraud and look at the experts ' forecasts for the next 2-3 years.

The concept of card fraud

Fraud is a deceit.

Card fraud – intentional, fraudulent actions of a person (a group of persons) with the application of information technology aimed at misappropriation of funds placed on card accounts of cardholders, as well as amounts owed to retailers for card transactions.

In simple terms - it is the receipt of goods or services through a payment card without informing a legitimate card holder.

The scale of card fraud is great. According to The Nilson Report, worldwide losses from card fraud amounted 27,69 billion in 2016 (share of losses from fraudulent acts - 7.2 cents per$ 100), according to forecasts this figure will reach the level of 31.67 billion by 2020 (6,5 cents per 100$)

The largest number of fraudulent transactions performed via Internet and mobile devices (including Internet Bank)


The percentage of CNP-fraud in different countries in the total volume of fraudulent transactions for 2016, %

Just in 2015 USA began the transition to EMV cards, so the share of CNP fraud in the total amount of fraudulent transaction lower than, for example, in Canada or Russia. However, experts agree that in the near future USA will be a leader in CNP-fraud. The main reason is that 77% of all Commerce in the U.S. is online Commerce. This is the highest rate in the world.

Types of card fraud

There are a lot of types of card fraud, and thanks to technological advances, their number from a year to year only grows, which is the reverse side of technological progress.

The most common types of fraud:

  1. Lost/Stolen Cards
  2. Daily a huge number of people become victims of thefts of handbags, purses, wallets, or victims of their own negligence when a bank card is simply lost, forgotten in the store. It takes some time to block the card, but sometimes a few minutes is enough for fraudster to steal a certain amount from the card account of the owner.
  3. Counterfeit cards
  4. Counterfeit cards – is a card that their visual appearance does not differ from the card that released legally, but the production of individual elements of the card (the logo of the Bank, the logo of the payment system, typeface, etc.) are in violation of the rules of PS. Most of these bank cards are used to re-encoding - the data read from the real Bank card is applied on the magnetic stripe.
  5. Card Not Present fraud (CNP)
  6. The purchases are made remotely (e.g. via the online store). When fraudsters capture the database of card details, they use this method to withdraw funds.
  7. Cashing
  8. Numerous transfers of funds from one account to a lot of different accounts with subsequent withdrawal of cash from ATMs.
  9. Skimming
  10. This copying of Bank card data using a reader (skimmer). The skimmer copies all the information located on the magnetic strip of the card: card number, cardholder name, card expiry date, CVV - and CVC-code.
  11. ATM Fraud
  12. Patch panels on a keyboard, cameraы recording a pin input, such method as the "Lebanese loop", as well as theft or substitution of the card.
  13. Phishing / Vishing
  14. Very often this type of fraud is called a method of social engineering. It is aimed at a gathering information about Bank cards data. The card holder receives a messages, e-mails, phone calls (vishing or voice phishing) from "employees" of the Bank to provide payment card details.
  15. Pharming
  16. Fake websites. The client, using any site, is redirected by scams to a fake website. The card holder is sure that he uses the Bank services or checked online store and fearlessly enters the payment details of the Bank card.

Card fraud causes great damage to the issuing banks, acquiring banks, retailers and the cardholders. In addition to financial risks, banks and retailers also have reputational risks, which entails the loss of customers and financial losses. To minimize losses, it is necessary to build a competent management fraud policy.

It is important for the card holder to understand that he is also a member of a management fraud policy. Not only the Issuer bank or the acquirer bank are responsible for the scale of card fraud that we see around the world. Safe using payment cards starts with the card holder.

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