In Germany, as elsewhere, the growth of ecommerce and mobile commerce brings increases in online and mobile fraud. Carefully tailored fraud prevention measures – appropriate to different payment types - play an important part in countering fraudsters and protecting genuine consumers.
Although domestic fraud levels in Germany have historically been low – the debit cards so popular here are less susceptible to fraud - fraud is on the rise and grew in 2012 to EUR 144.3 million, according to Euromonitor International.
In common with other countries, payment fraud in Germany migrated to the online environment as EMV was adopted. According to FICO, card not present transactions accounted for around 70% of total fraud losses in 2012, with counterfeit fraud representing 20%. ATM fraud accounted for a third of all cross-border card-present fraud, and an even higher percentage of domestic card-present fraud.
Germany ranks third globally in terms of phishing attacks (behind the US and UK), accounting for 28% of EMEA volume and USD 386 million of losses. A relatively low level of investment in fraud detection and prevention technology has made Germany susceptible to fraudsters migrating from other countries, such as the UK, that earlier adopted more robust solutions. The situation is changing as total fraud increases and German issuers take stringent measures to address cross-border fraud.
The A.T. Kearney Global Retail E-Commerce Index 2013 identified Germany as the Western European market with the highest growth potential. Over half the country’s e-commerce merchants are actively engaged in cross-border commerce and the sector’s rapid growth is evidence of their success. Sophisticated online fraud prevention techniques will be critical, as domestic and cross-border ecommerce grow.
Mobile payments are also growing strongly and, according to BITCOM, 30 million smartphones will be purchased in Germany in 2014. Since mobile fraud rates are significantly higher than other sales channels, merchants will need to ensure they employ tailored fraud strategies to control mobile fraud while enabling genuine customers as they move between channels.
With fraud levels on the rise and 70% of payment fraud associated with online payments, merchants need to ensure they have robust, real-time fraud prevention solutions in place, tailored both for individual product segments and for the payment types favoured by German consumers. Payment methods such as bank transfers and direct debits have differing risk profiles from card payments, and provide different data with which to detect fraud. Merchants accepting alternative payment types need flexible fraud prevention solutions that can be tailored to ensure that risk is managed effectively, whichever payment method is used.