CNP fraud to cost over $7bn in the US by 2020
CNP fraud will cost retailers and financial institutions $7.2bn in the US by the end of 2020.
Card-not-present fraud – fraudulent transactions where a credit card is not physically presented to a merchant – will cost retailers and financial institutions $7.2bn in the US by the end of 2020, according to a study by iovation and Aite Group.
The study found that account takeover losses for financial institutions will rise from $644m in 2015 to over $1bn by 2020.
The two firms believe that this fraud will shift from traditional credit and debit cards with magnetic strips to EMV chipped cards.
The study highlighted that 81% of credit and 57% of debit cards in the US will be EMV capable by the end of 2016.
The counterfeit fraud will fall from a high of $4.5bn in 2016 to less than $1bn in 2020 as more merchants will become EMV-capable, the report found.
iovation product marketing manager Michael Thelander said: “In other countries that preceded the U.S. in widespread EMV adoption, there was a big increase in counterfeit fraud activity during the time period where people transitioned from stripe to chip cards.
“We are seeing that exact scenario play out in the U.S. as criminals realise their window for perpetrating counterfeit card fraud is rapidly closing, so they are working through their vast piles of compromised cards.”
Aite Group research director Julie Conroy said: “As the U.S. migration to EMV progresses, the combination of continued strong growth in e-commerce, ready availability of consumer data and credentials in the underweb, and disappearing counterfeit fraud opportunity will create a perfect storm that will result in a sharp rise in CNP fraud.
“CNP fraud is already on the rise, and the problem will get worse before it gets better. Financial institutions and merchants must invest in technologies that will help detect fraud, while at the same time maintaining a delightful user experience.”