Payment card fraud in the US is rampant, and it’s adding up to big losses. The US accounted for 51% of global payment card fraud costs in 2013, according to BI Intelligence estimates.
Here are the key points for 2013:
- The cost of global payment card fraud grew by 19% last year to reach $14 billion.
- The cost of US payment card fraud grew by 29% to $7.1 billion.
- In the rest of the world, card fraud grew by 11% to $6.8 billion.
There are three reasons why payment card fraud is so enormous in the United States:
- The US accounts for a significant proportion of global payment card volume. That said, US share of fraud is greater. For example, in 2012, the US accounted for 23.5% of payment card volume but 47.3% of payment card fraud, according to Nilson.
- The US has not yet adopted the EMV or “chip card” standard popular elsewhere in the world. Among other security advantages, chip cards are difficult to duplicate for fraudulent transactions, while magnetic stripe payment cards used in the US are much easier to copy.
- Record-breaking data breaches at major retailers (most notoriously, Target) in 2013 added about $500 million to the total fraud cost in the US.
The data shows why Visa and MasterCard are going to push US retailers and acquiring banks to upgrade to the “chip” standard in the next year and a half.