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Trends in consumer payment fraud: A call for consistent strong authentication across all consumer payments
Journal of Payments Strategy & Systems,
8
(1),
43-63
(2014)
Abstract
Fraud has been a cost of doing business in the merchant and retail space since the beginning of organised trade thousands of years ago. Payment fraud is only a part of overall retail fraud, but it seems to have moved closer to the focus of the discussion in the financial industry and with the other stakeholders in the financial ecosystem, eg the merchants, the consumers and, last but not least, the regulators. This paper reviews the latest consumer payment fraud statistics and analyses the recent regulatory activities. The actions taken by the various stakeholders to detect or prevent fraud are then assessed in the context of both meeting regulatory provisions and enabling growth of retail volume seamlessly across all channels. It concludes with an urgent call for introducing a strong authentication regime across the consumer financial industry in a consistent and comprehensive way.
Keywords: card payments; EMV; chip cards; strong authentication; single sign-on; payment fraud; regulation; payment system integrity
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Author's Biography
Gerd Cimiotti is Managing Director of SRC Security Research & Consulting, a professional services company, set up as a common competence centre of the German banking industry for information security, with a strong focus on electronic payment systems and smart-card-based systems. Gerd Cimiotti has long-standing experience in retail banking IT projects, especially in payment cards, and in the conception and implementation of complex transaction systems. He represents the German banking industry on the EMVCo Board of Advisors and in several European card standardisation initiatives. Before joining SRC, he worked for the Association of Cooperative Banks in Germany, with special responsibility for card payment systems. Gerd Cimiotti holds a Master’s degree in business economics from Universität des Saarlandes in Saarbrücken, Germany.
Toni Merschen PhD is responsible for managing all business and technology aspects, development and deployment of chip-based business solutions for MasterCard’s global Advanced Payment Solutions department. In this role, he is responsible for developing, coordinating and executing MasterCard’s chip strategies and tactics on a global basis. Toni is head of the MasterCard global Chip Centre of Excellence, which leverages its extensive and unique chip expertise to support MasterCard customers around the world in designing and deploying innovative chip solutions which create business value for banks, merchants and consumers. The Chip Centre of Excellence is headquartered in Waterloo, Belgium, and has additional staff in London and Warrington, UK, Singapore, Dubai, Toronto and Miami. Prior to joining MasterCard Worldwide, Toni was head of Citigroup’s global competence centre for chip card-enabled solutions, mobile financial services, PKI and biometrics, located in New York. Prior to joining Citibank, he had numerous engineering, development and marketing responsibilities within IBM over a 14-year period, with assignments in Germany, the UK and New York, including worldwide responsibility for their research and development activities and strategic alliances for smart card technology and solutions. Toni represents MasterCard on the Executive Committee of EMVCo, the company that manages EMV (Europay/MasterCard/Visa), the global chipbased payments standard. He holds a PhD and a Masters degree in mathematics and physics from the Technical University of Aachen, Germany.
