Global payment brands American Express, Discover, MasterCard and Visa, will process more than $10 Trillion in payments in 2012. We expect trends will continue through at least 2016 and envision that the branded card business will surpass $20 trillion in spending by 2017.
While developments in emerging markets such as Africa, Asia Pacific, the Gulf Region and Latin America experienced growth rates in excess of 20%, more mature markets such as Canada, Europe and the United States “only” saw growth rates of about 12%.
What is exciting about all this is that most payment card transactions occur with a physical payment cards in hand. The next wave of growth will center on transactions where the payment card is not physically used in the transaction. US Cardholders today, for instance, only use the internet for about $120 billion in spending, about 3% of the US’ $3.5 Trillion transaction volume. Mobile payments are just a fledgling industry that will take 3 to 4 years to mature. Moreover, Near Field Communications (NFC) transactions, where you flash you Near Field Communications card has not passed $100 billion mark yet.
All these transactions require confidence in the payments system, which is a private enterprise that runs on the backbone of retail banks. You will find many reports on the subject of fraud in our library but the most important thing for you to know is that card fraud rates are only at seven basis points globally (and only five basis points in the US).
Those numbers deteriorate as you move away from face-to-face transactions. In some cases, fraud can be 15 times higher in card not present transactions, versus when the card is present. As the next few years pass, more and more transactions will be without a payment card and by 2016; we can envision that more than $2 trillion in transactions can come from card not present transactions.
Our April 3, we will discuss this topic. Join us to hear about how the volumes will parse out and what infrastructure card issuers must consider to shield their balance sheets from this risk. We will also discuss our upcoming Vendor Review on best in class solutions to prevent card fraud.
on March 29, 2012
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Agreed this is the big growth issue in Card Fraud, and Fraud in Retail Banking.
In Australia APCA research (http://www.apca.com.au/payment-statistics/fraud-statistics/2011-financial-year) indicates:
- Credit, debit and charge card fraud (signature-permitted debit, credit and charge cards and card-not-present (CNP) transactions) increased from 58.9 cents to 74.3 cents in every $1,000 transacted. Fraud incidents on these cards increased from 34.6 to 41.9 in every 100,000 transactions.
- Card CNP fraud is increasing, and now accounts for 71% of fraud value on Australian credit, debit and charge cards, of which more than half (64%) occurs overseas.
- CNP and Card Skimming together account for 85% of Card Fraud value on transactions made in Australia, and 95% of Card Fraud value for transactions made Overseas, on Australian issued cards.
on April 4, 2012
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Thanks, John.
Thanks for the link to the Australian market.
That was one of the case examples we used in the TowerGroup Live WebEx. and also brought in data from Canada and UK.
EMV is a solution and it does help with certain components of fraud.
It needs to be complimented with other strategies that range from physical boundaries to logical controls, particularly as volumes grow.
Brian
on April 5, 2012
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[...] basis points (0.07 percent) globally and five basis points (0.05 percent) in the US, according to a CEB TowerGroup blog. The fraud rate for riskier online transactions is down from 90 basis points (0.9 percent) in 2010 [...]