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The cost of identity theft equals Google's net income

Every second, 175 fraud attempts take place. Such attempts are no longer about some spotty teenagers having fun - most of the fraud is now committed by well-funded, well-organised (and in some cases - government-sponsored) professional teams. Cybercrime is big business now. Exactly how big is it?

Most of online fraud, one way or another, revolves around identity or data theft. The main end-use of the stolen information - payment fraud. The true cost of such fraud globally is US$10bn - that equals Google's net income. At the current growth rate, payment fraud in 2014 could equal 5% of Saudi Arabia's GDP.

Where does the bulk of that payment fraud come from? From the weakest link. Cheetah is the fastest animal in the world, yet it only hunts weak or young animals: cheetah suffers a minor brain damage when running at top speed, hence it only goes for an easy prey. So do fraudsters.

The USA accounts for almost half of card fraud, yet just a third of the transactions volume. There is a simple reason for that: magnetic stripe cards are an easy target for both physical and online fraud.

That is why Visa and MasterCard are planning to move US credit cards to "Chip-n-PIN" by April 2013. When that happens, where will the fraud cheetahs move to? Online and mobile payments (and banking).

However, if "Chip-n-PIN" protection is extended to the Internet and mobile phones, where will the fraud then migrate to

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This post is from a series of posts in the group:

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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