SCA Success As ECB Reports Lowest Card Fraud Since Records Began

June 1, 2023
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Card fraud in 2021 fell to the lowest levels since the start of data collection, the European Central Bank (ECB) has confirmed, crediting the EU’s authentication requirements.

Card fraud in 2021 fell to the lowest levels since the start of data collection, the European Central Bank (ECB) has confirmed, crediting the EU’s authentication requirements.

The ECB has published its card fraud report for 2020 and 2021, which shows a continued downward trend.

The total value of fraud by issuing country declined in 2021 for 20 EU member states, while increases for the remaining seven member states were minor.

Meanwhile, card fraud constituted 0.028 percent of the total value of card payments made using cards issued in the Single Euro Payments Area (SEPA).

This amounts to €1.53bn from a total value of €5.40trn. By comparison, card fraud in 2019 amounted to €1.87bn from a total value of €5.16trn.

This is in comparison to the highest share of card fraud observed to date in 2008, which was 0.048 percent.

Card-not-present fraud, which accounted for approximately 84 percent of the total value of card fraud in 2021, declined by 12 percent from 2020.

It was at the end of 2020 that the EU’s strong customer authentication (SCA) standards were introduced.

Although the EU’s regulators will see these statistics as a sign of success, national regulators in countries such as France have warned already that fraud is moving elsewhere, such as towards authorised push payment (APP) scams.

“The aforementioned success of both industry and regulatory measures in reducing card fraud may shift the attention of fraudsters towards card holders, potentially further increasing fraud through social engineering or the theft of physical cards,” the ECB warns.

Card-present fraud, meanwhile, fell by 6 percent in 2021 from its 2020 level.

This, the ECB says, is owing to the continued global rollout of industry standards, which have been effective in reducing opportunities to commit magnetic stripe counterfeit fraud.

“This shows that the increased global roll-out and maturity of EMV terminals has been effective in reducing opportunities for committing magnetic stripe counterfeit fraud,” the ECB says.

The majority of card fraud in both 2020 and 2021 continued to involve cross-border transactions.

Cross-border card transactions represented 11 percent of the overall value of card payments in 2021, but accounted for 63 percent of the value of card fraud, for example.

Whether cross-border transactions are an issue that regulators decide to delve deeper into remains to be seen.

In last year’s consultation on the revised Payment Services Directive (PSD2), the European Commission touted the possibility of SCA being applied to so-called “one-leg transactions”, which occur when one part of the transaction takes place outside the European Economic Area.

At a seminar to the Berlin Group last week, Eric Ducolombier, the EU’s civil servant leading work on the PSD3 legislation, suggested that the commission thinks SCA has worked but still wants to introduce new rules on fraud prevention and redress.

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