The Australian payments market is undergoing rapid change with online shoppers on average spending more per transaction in Australia than anywhere else. This has its impact on fraud levels in the country.
While card fraud fell 1% to AUD 261 million in 2012, it increased again in 2013 by 16%, to AUD 304 million. In 2014, fraud on Australia based cards increased to AUD 386.7 million - indeed, payment card fraud increased from 46.6 cents to 58.8 cents per AUD 1000 spent in 2014.
The nature of fraud has changed in recent years, as Australia has combated skimming and counterfeit fraud by introducing chip and PIN technology. In 2009, counterfeit fraud peaked at AUD 66 million and accounted for 32% of the total. The introduction of chip and PIN in 2009 had a significant impact on skimming attacks which, at AUD 42.1 million, accounted for just 11% of total fraud in 2014. Chip technology on proprietary debit cards and mandatory use of PIN authentication on most scheme credit, debit and charge cards from November 2014 will also impact on counterfeit fraud levels in future.
Australia has seen very rapid growth in online shopping – up by 140% in the four years to end-2013 and now accounting for 40% of all credit card and 25% of debit card activity. This, in turn, has led to a sharp rise in the percentage of CNP fraud - in 2014, CNP fraud stood at AUD 299.5 million a 42% increase on the previous year and representing 77% of total fraud in Australia.
This growth should be considered in the more general context of cybercrime as there was a 23% increase in the number of data breaches in 2014. One response to CNP fraud has been the industry rollout of tokenisation as well as stricter implementation of PCI-DSS standards at merchants and service providers. The use of 3D Secure authentication and other sophisticated fraud prevention tools have also helped to ensure that, while CNP fraud has increased, it has done so at a lower rate than overall online business growth.