As I outlined in my previous blog (click here to view), we have seen a rapid movement to card channel payments as cash usage has declined during the pandemic. In the UK, as early as April this year cash withdrawals had declined by 60% (according to the UK Government) - mainly due to a combination of people staying indoors and being unable to use cash for payments, as well as reports of the risk of virus transmission by handling cash (something that the World Health Organisation has advised may not necessarily be the case).

This has meant that more consumers have moved to card payments out of necessity, particularly online and with more regularity than they may have done pre pandemic. Consequently, consumer behaviour has changed, and that behaviour plays a huge part in fraud and risk management. Dependent on the methodology used to monitor transactions there is a risk of an increase in false positives if there is a reliance solely on static rules or historic models. Not to mention the need to constantly adapt rules to fit the new payment trends. But also, with the movement to other payment channels (instant payments or the QR Code based transaction that are so popular in Asia) there is a real need to be able to start looking at cross channel monitoring as a means to ensure you are able to protect your customer by looking at all account activity away from the cards.

And it is also interesting to note that fraudulent transactions on cards overall are down – again probably due to the reduction of spend in a bricks and mortar setting and the general economic climate. Certainly, within our own Fraud Managed Services we saw a reduction of fraud cases in the immediate period after lockdown. And going by published fraud statistics from UK Finance fraud in the first half of 2020 UK Card Fraud is down 8% on the same period in 2019.

This means that levels of online card fraud are by default also reduced – certainly in those countries with a strong 3D Secure presence. In the UK Contactless Fraud is also down – which is surprising given that early in the Pandemic crisis the maximum contactless transaction threshold was increased to £45 in the UK from £30. And in Europe most countries have a maximum contactless transaction limit of €50. In fact, according to NFC World most limits have been increased by at least 50%, with most countries having a 100% or more increase in limit. My assumption would be that again, the restrictions applied by governments has restricted the level of spend – on top of the economic pressures on consumers through jobs being put on hold or disappearing as retail revenue dropped significantly.

So, while card fraud is down due to the current changes to card usage, we are seeing increases in other fraud types as frauds adapt to the changing environment and look for other channels to commit fraud in. In my next blog we will examine where the fraud is moving to.