With the year nearly over, I find myself mulling over some of the main trends of 2009, one of which is the significant decline in UK face-to-face payments fraud. This trend can be traced back to the UK’s adoption of EMV or Chip and PIN in 2003, which had an immediate impact on fraud reduction. According to UK Payments Administration, the losses on UK high street transactions reduced by 55 per cent between 2004 and 2008, from £218.8m to £98.5m respectively. While 2008 figures increased in comparison to the previous year, first half 2009 figures show an encouraging return to the trend of declining levels of fraud.
EMV is now mandated across the entire Eurozone as part of the SEPA Cards Framework. However the EU is not the only region to have successfully adopted this technology. Australia, for example, is stepping up its migration to Chip and PIN cards and will ban signature transactions by April 2013. Canada is going down the same route and will not be accepting magnetic stripe transactions beyond 2015.
There is a flip side to this however and, as criminals move away from countries with secure Chip and PIN payment systems, those that continue to use magnetic stripe technology, such as the US and parts of the Middle East, are likely to be seen as an increasingly attractive target. These regional disparities in face-to-face payment security are unlikely to change significantly in 2010, so countries with magnetic stripe cards could come under increasing attack by fraudsters.