After years of rising card-not-present fraud, which retailers have had to shoulder, is technology finally winning the battle?
The news out this morning that both overall payment card fraud levels, and particularly card-not-present (CNP) fraud figures fell in 2009 compared to the previous year should come as some relief to those retailers who have invested in technology to combat Verified by Visa and/or MasterCard SecureCode services.
The level of CNP fraud has risen every year since 2005, peaking in 2008 at £328.4m. Having fallen by 19% to £266.4m in 2009, it seems that the stronger uptake of the online fraud prevention services by both retailers and consumers is starting to pay off.
But a note of caution should be sounded. As is always the way, fraud never goes away, and as one loophole is closed another will always be found. One only has to think back a few weeks to the Cambridge researchers and their latest compromise of Chip & PIN technology.
After it was introduced, Chip & PIN halved the amount of card fraud committed through face-to-face retail transactions in a year, between 2005 and 2006. But from here, it has stubbornly refused to fall further beyond that £72m mark (in fact increasing back to nearly £100m in 2008).
And the clear loophole that still exists for the online fraud services is that consumers are not compelled to sign up to them, making the cost for retailers to do so harder to justify.
Despite having written about the high security protection these services provide, I myself only succumbed and signed up my credit card to the scheme when I was actually forced to, on the Transport for London site, in order to pay the congestion charge. And before that I had abandoned baskets several times on other sites to try and avoid having to join the scheme.
Retailers are delivering for the banks in terms of adding the security layer to their sites. But until consumers are compelled to register their cards with the schemes, then it is likely that CNP fraud will hit a level beyond which it won’t fall further too.