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An article relating to this blog post on Finextra:

UK card fraud losses fall to 11-year low

Fraud losses on UK debit and credit cards fell seven per cent in 2011 to £341 million, an 11-year low, according to figures from the UK Cards Association.

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Fall in card fraud does not reflect reality

It was interesting to see the figures from Financial Fraud Action UK yesterday, which showed a reduction in card fraud. As is often the case, however, what appear to be encouraging statistics disguise a less reassuring reality.

In recent months, we’ve seen banks begin to take a far more aggressive approach to transaction declines and, in the case of cross-border transactions, on average nine out of ten declined transactions are in fact legitimate.

This is the credit card equivalent of bricking up your doors and windows to prevent burglary! It’s very effective, but hardly a long term solution.  This very blunt instrument approach to fraud reduction may reduce absolute fraud, but it also causes widespread consumer dissatisfaction and costs the banks highly in lost revenue and administration costs.

Rather than simply basing their decisions as to whether to accept or decline a transaction using historic data and behavioural patterns of customers, complementary technology exists which enables banks to anonymously make accurate assessments of the real time situation of their customers, so that not only is fraud reduced, but customer satisfaction is maintained at the same time.


Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 09 March, 2012, 16:11Be the first to give this comment the thumbs up 0 likes

" that not only is fraud reduced, but customer satisfaction is maintained at the same time." To which, let me add "revenue". While absolute fraud loss figures are useful, the more important metric is "fraud loss as a percentage of transaction value". After all, like DSO, the easiest way to achieve zero fraud loss is by selling nothing! 

Pat Carroll

Pat Carroll

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17 Mar 2011



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Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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