The introduction of chip and Pin technology has had a
dramatic impact on payment card fraud, new figures have
revealed.
Figures from Apacs, the UK payments association, show that total
card fraud fell by 5% between January and June, with the amount of
money stolen by fraudsters totaling £209.3m, compared with £219.5m
in the same period last year.
But fraud in face-to-face retail transactions has fallen far
more sharply, dropping from £73.2m to £42.1m year on year – a 43%
reduction – as the introduction of chip and Pin in retail outlets
has continued to bite.
The Apacs figures showed that internet, phone and mail order
fraud – dubbed “card-not-present” or CNP fraud – increased in the
first six months of the year, although at a much slower rate than
previously. CNP fraud now accounts for 46% of all losses, but grew
by just 5% year on year, compared with a 29% increase between 2004
and 2005.
The payments association is liaising with banks, card schemes,
retailers and systems suppliers to set up an authentication system
to prevent fraud in online and telephone retail, with a trial
system to be put in place next year.
The system will require cardholders to insert their cards into a
handheld reader and enter their Pin. The card reader will then
generate a single-use pass code, which can be given to the retailer
for authentication with the cardholder’s bank.