Interac debit card fraud losses plummet for the sixth consecutive year
26 February 2016 | 2004 views | 0
Fraud numbers released today by Interac Association (“Interac”) show that Interac Debit losses, due to skimming, have continued a six year drop setting a new record low of $11.8 million in total losses to financial institutions in 2015.
This reflects a 27 per cent decrease from the previous year when fraud losses amounted to $16.2 million in 2014. In the rare occurrence of fraud, consumers are fully protected through the Interac Zero Liability Policy.
Fraud exploitation occurring in Canada accounted for only $2 million, or 17 per cent of total losses - a drop of 40 per cent from the $3.4 million of domestic fraud reported last year. The number of cardholders that were reimbursed has also been drastically cut to 25,000 Interac Debit cards, from a high of 239,000 in 2009.
“With only $2 million of fraud losses occurring within Canada, we are having tremendous success locking down the Canadian payments space and preventing criminals from committing Interac debit card fraud,” said Mark Sullivan, Head, Fraud Market Management, Interac Association/Acxsys Corporation. “Our world-class policies and technologies set the standard for debit card security and send a clear message to criminals: we will not tolerate fraud on the Interac network.”
In 2008, the Canadian payment card industry began a widespread migration to chip technology, which enabled Interac debit cards to store and process data with greater security. Unlike magnetic stripe-based debit cards, Interac chip debit cards use cryptography to communicate with the point-of-sale terminal to carry out security checks and ensure card validity. Since the migration of chip technology in 2009, the Interac network has seen a drop of 92 per cent from fraud losses due to skimming ($142 million in 2009 versus a low of $11.8 million in 2015).
“Based on the Interac debit card fraud losses that occurred in 2015, the vast majority - $9.8 million - stemmed from exploitation at magnetic stripe devices outside of Canada on other network systems, not on the Interac Network,” said Sullivan.
Finding it increasingly difficult to commit fraud on Interac debit cards in Canada, criminals have begun migrating their fraudulent payment card activity to international non-chip environments and card-not-present exploitation on credit cards and other networks’ debit products.
Chip technology is the backbone of Interac Flash®, the contactless enhancement of Interac Debit. As a result, Interac Flash enabled cards have increased protection against skimming, counterfeiting, and transaction replay types of fraud, including electronic pick-pocketing. While not all contactless payments products are created equal, Interac Flash has all the same security features as Interac Debit, including EMV-based chip processing, Interac Zero Liability, plus the added protection of small transaction limits. Typically, no single transaction can be more than $100 and the total spend can not exceed $200 before the cardholder must enter their PIN.
While the number of Interac Debit and Interac Flash cards in market is growing, fraud is continually shrinking. Of all the active debit cards last year, only 0.09 per cent of cardholders were affected by fraud. In 2015, more than $347 billion flowed through the Interac network across 5.91 billion transactions. When you compare the fraud numbers, 0.003 per cent of total transaction amount was fraudulent with only 0.0005 per cent occurring inside Canada.
“As leaders in fraud prevention and detection, Canadians should feel exceptionally confident using Interac products and services,” said Sullivan. “As our data shows, Interac Debit and Interac Flash are among the safest ways to pay using a payment card.”