First Data International, a global leader in electronic commerce and
payment services, today announces the findings from a study of
banking fraud in Europe, Middle East and Africa. Fraud experts from
52 banks across the region call for greater co-operation in the fight
against fraud while acknowledging the significant barriers that stand in
the way of collaboration.
Commissioned by First Data International and carried out by Olive
Insight, an independent research firm, the study explores the
experiences and opinions of senior fraud experts in relation to ATM,
POS, online banking and card not present (CNP) fraud.
Key findings include:
– Fraud is global, learned and progressive. Ninety-six percent of
respondents believe that fraud is perpetrated on a global stage, learned
and passed from one part of the world to another. This means that the
industry has the opportunity to anticipate how those involved in fraud
will strike next – and take preventative action in advance of a
potential attack.
– Banks feel handcuffed. Banks’ efforts to combat fraud are
constrained by concerns about the customer experience and their own
competitiveness. As one respondent states: “Organizations are secretive
of fraud losses and that inhibits our ability to work together.” Data
protection legislation is seen by many banks as a significant barrier to
industry co-operation, although European data protection experts at a
recent First Data forum suggest that the problem lies more in perception
and understanding than in the realities of the current legal framework.
– Regulation can be a strait-jacket. Fifty-five percent of
respondents believe that regulation helps to combat fraud. Others,
especially in Western Europe, are concerned that regulation may prove
too restrictive in a rapidly changing environment. Katy Worobec, Head of
Fraud Control at APACS, the UK payments association, comments:
“Regulation may not allow for the changing face of fraud and may not
incorporate the flexibility necessary to meet new developments. Fraud
changes and migrates too quickly to have inflexible legislation around it.”
– Banks are most concerned about new and emerging frauds. While ATM
and POS frauds are more prevalent – and more expensive – today, online
fraud is a real problem across Western Europe and a significant threat
elsewhere in the region, where Internet usage is expected to rise.
Online banking fraud offers the perpetrator scale efficiencies (the
capability to defraud more people, more quickly) and reduced personal
risk. Thirty-eight percent of respondents report an increase in phishing
attacks and over a third are seeing more online CNP fraud. CÃÂédric
Sarazin, Cartes Bancaires, chairman of the European Payments Council’s
Card Fraud Prevention Task Force, states: “One common trend across all
major markets is that CNP transactions are generating more and more
fraud. While total fraud is decreasing, we should be very cautious as
CNP fraud may well become a much larger problem.”
– Technology is a key weapon in the fight against fraud and a clear
priority for over 50 percent of respondents. Many organizations are
introducing anti-skimming devices and improving security at ATMs.
Innovative ways of analyzing data are under review and need further
exploration. Link analysis, for example, can help banks to gain a
joined-up view of fraud across the organization while multi-factor
authentication promises to reduce the reliance on static data. Banks
need to evaluate technology implementation costs in the light of both
financial losses from fraud and its impact on consumer confidence.
Jackie Barwell, director of fraud management, Europe, Middle East and
Africa, First Data International, comments: “The fraud experts
participating in our study clearly recognize that fraud is a global
phenomenon, demanding a global response. At the same time, it is a
sensitive subject for banks concerned about reputation, competitiveness
and profitability. Banks acknowledge the importance of working together
and with other agencies to combat fraud, but they are not yet sharing
data at a level that will make a real difference to the struggle.
“First Data is committed to supporting our clients around the world in
the fight against fraud. We are very active globally today, working with
banks and merchants to implement the most up-to-date fraud solutions.
Members of our Fraud Working Group are located across Europe, Middle
East and Africa to ensure that they have a deep understanding of frauds
operating at a local level, and can apply our global fraud management
capabilities to the benefit of our clients.
“We are also taking steps to address the problems associated with the
sharing of information across the industry. This becomes increasingly
important as the introduction of a Single Euro Payments Area (SEPA) in
Europe will increase cross-border payments, and so accelerate the need
for multi-national databases to fight fraud. At a meeting held in Vienna
earlier this month, clients gave us overwhelming support for an
initiative to promote cross-border co-operation, and we are now actively
engaged in seeking solutions that will enable the industry to
collaborate as effectively as the fraud architects do today.”
About First Data International
First Data International, part of First Data Corp. (NYSE: FDC), is a
leading provider of electronic commerce and payment solutions for
businesses worldwide. First Data International serves a diverse range of
markets, leveraging global scale through a local presence and
maintaining focus on individual client needs. The company has
approximately 7,900 employees and operates across Europe, Middle East
and Africa, Latin America, Canada, Australia and Asia-Pacific.
First Data serves 4.9 million merchant locations, 1,900 card issuers and
their customers. First Data powers the global economy by making it easy,
fast and secure for people and businesses around the world to buy goods
and services using virtually any form of payment. The company’s
portfolio of services and solutions includes merchant transaction
processing services; credit, debit, private-label, gift, payroll and
other prepaid card offerings; fraud protection and authentication
solutions; electronic check acceptance services through TeleCheck; as
well as Internet commerce and mobile solutions. The company’s STAR
Network offers PIN-secured debit acceptance at 2 million ATM and retail
locations.
