Digital disruption is redefining the banking and finance industry. Chip technology and contactless functionality has changed the way people pay, with direct impact on how we protect and manage transactions.
Australians are using electronic and card-based payments more than ever. More than $100 trillion worth of non-cash transactions went through the Australian payments system last year (a 4.6% increase on 2013-2014) according to the Australian Payments Clearing Association. The online shopping space is seeing a rapid take-up of credit cards, with card-not-present now accounting for nearly 40% of credit card value. The phasing out of signatures means PINs are being used more widely, while cheque use continues to decline.
But what does that mean for fraud management?
Australia’s widespread adoption of chip technology on payment cards and merchant terminals is making inroads on counterfeit and skimming fraud. Despite this, fraud in Australia is increasing in the card-not-present space, pointing to a global trend in online card fraud.
Indue Analytics & Reporting Manager, Dean Wyatt, says that while the industry continues to find new ways to curb fraud, there’s always going to be crooks looking for loopholes.
“Fraudsters will move around from country to country — not just opportunists taking advantage of these loopholes, but the organised crime syndicates specifically targeting e-payments,” he said.
“Indue’s fraud analysts are specifically looking for these trends in Australia and overseas, to ensure we help our clients stay one step ahead.”
Indue’s card fraud management service — Orion — monitors potential threats to account holders, identifies suspect fraudulent behaviour and alerts clients. The service encompasses the full fraud lifecycle, from a transaction taking place to the charge-back process and re-issuing of funds to the customer.
Used by financial institutions, retailers, insurance companies, and gift and loyalty card providers that don’t have their own fraud management systems in place, Orion provides access to Indue’s expert fraud team.
What does the future of fraud management look like?
According to Dean, it has never been more important to have a robust fraud management system.
“Fraud is changing as the payment landscape changes. A number of businesses and merchants are now developing their own payment products and offering sales through ecommerce channels, resulting in facing similar issues to financial institutions,” he said.
Financial institutions, retailers, the healthcare and education sectors, government bodies and computer software providers are high risk targets for attack.
Industry figures show a 23% increase in data breaches in 2014, worth $393 million in fraudulent transactions.
As payments change, so too does the infrastructure behind them — which means fraud management is constantly evolving to keep up with the fraudsters.
Indue is working on the New Payments Platform, a major structural upgrade to payments technology in Australia which will allow for real-time payments.
“Fraud management will apply similar logic from the cardholder platform to the New Payments Platform monitoring transactions in real-time. Indue are investigating furthering our fraud capabilities to combat the New Payments Platform fraud and Money Laundering in real-time” Dean said.
As fraud continues to shift globally, the industry continues to implement new measures to help prevent it. Despite this, a proactive approach to fraud management is always going to be crucial as the transaction environment becomes more complex.