According to estimates from FICO, card fraud in Asia costs financial institutions $400 million each year and is increasing by 20 to 25 percent annually. While this number seems very small relative to the tens of billions in card fraud losses worldwide, keep in mind that these are only the losses to issuing banks and card-based payments are much less common in this region.
In a brief BBC interview Dattu Kompella, FICO’s managing director in Asia, discusses the region’s growing middle class and their propensity to shop online. While China and other countries in the region have long been primarily cash-based economies that favor Cash-on-Delivery (CoD) payments for online transactions, the use of payments cards is increasing. However, the use of credit and debit cards is not nearly as common as in Europe and North America.
In the interview Kompella includes FICO’s estimate that financial institutions in Asia are losing $400 million annually to card fraud. Relative to the United States, which was responsible for $7.1 billion in card fraud in 2013, this figure is comparatively miniscule. But this should be kept in the perspective that card-based payments are still relatively new to most of the regions inhabitants with the exception of the wealthy who may have been using credit, debit or charge cards for more than a decade. Exemplifying the fact that payment cards are still a young and growing payment vehicle is the rapid expected growth of card fraud losses, which Kompella states are increasing by 20 to 25 percent per year.
Kompella continues to describe the evolving nature of fraud in the region as it transitions from primarily occurring at the point-of-sale to now being perpetrated online. As an example he cites Australia, where 70 percent of card fraud losses occur in the Card Not Present channel, and says this trend is expanding throughout the Asia-Pacific region as well as globally.
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