EMV Migration Slows Growth in Credit Card Fraud14 November 2005
Total losses from credit card fraud will reach US$600m in 2005 across the Asia Pacific region, according to latest research from global growth consulting company, Frost & Sullivan. The report, World Credit & Debit Fraud, forecasts that despite the introduction of anti-fraud measures such as the new EMV (Europay Mastercard Visa) standard in several countries, overall credit card fraud losses will exceed US$1bn by 2009.
However, the introduction of standards such as EMV will slow the overall growth in fraud levels, according to Frost & Sullivan. Along with the rise in card use, levels of fraud also have gone up considerably. Several countries such as Malaysia, Taiwan, and Thailand have taken up national-level programs to move to chip-based payment cards.
The most important program that has had a global impact is EMV migration with the formation of EMVCo in 1999. EMV is a set of global specifications established by Europay, MasterCard International, and Visa International (EMVCo) for cards, terminals, and applications to enable global smart card transactions and reduce fraud. Deadlines for conversion from magnetic stripe to chip card are set for each geographic region. This is expected to significantly drive EMV acceptance in Latin America, East European countries, Asia Pacific, and Canada until 2009.
In Malaysia, for example, all magnetic stripe based cards are being replaced by chip cards based on the EMV standard. The impacts of this switch have resulted in credit card fraud in Malaysia falling to its lowest level in 5 years.
However, card issuers and associations are finding it tough to build a convincing business case for investment in anti-fraud technologies where fraud levels are already low. For instance, Australia, New Zealand, and Singapore are countries where falling fraud losses have resulted in the lack of progress toward EMV compliance. Credit card fraud in Australia was estimated to total just under $75 million in 2004, witnessing a drop of nearly 5 percent from 2003. The banks are prepared to accept a certain level of fraud rather than investing in an entirely new chip card infrastructure which would justify the amount of fraud prevented.
According to Frost & Sullivan Australia Consulting Director, Mark Dougan, “EMV migration is significantly impacting fraud levels in those countries where fraud levels were becoming critical, such as Malaysia”.
“However the costs incurred in migration of all magnetic credit cards to chip-based cards are substantial and still not justifiable in those countries where fraud levels are lower” adds Dougan.
If you’d like to know more about Credit & Debit Fraud in Asia Pacific, or to schedule an interview with Mark Dougan, please contact:
Sharmin Jassal
Corporate Communications
Frost & Sullivan Australia
E: sharmin.jassal@frost.com
About Frost & Sullivan
Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics and demographics. For more information, visit www.frost.com
Source: The Open Press
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