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.
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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.