CARPINTERIA, Calif.– New data show worldwide payment card losses from fraudulent transactions continues to rise.
For every $100 in volume being spent on payment cards, 7.15¢ was fraudulent, up from 6.97¢ per $100 in 2015, according to The Nilson Report, with losses in the U.S. considerably higher, although the U.S. has gotten much better at fighting fraud.
Fraud losses incurred by payment card issuers, merchants, acquirers of card transactions from merchants, and acquirers of card transactions at ATMs on all credit, debit, and prepaid general purpose and private label payment cards issued worldwide reached $22.80 billion last year when global card volume (purchases of goods and services combined with cash advances and withdrawals) totaled $31.878 trillion, the company said.
Worldwide fraud grew by 4.4% over 2015, outpacing volume, which grew by 1.8% over last year, according to The Nilson Report.
The U.S. accounted for 39.5% or $9 billion of the worldwide gross card fraud losses, while generating 23.9% of total global purchase and cash volume. U.S. fraud reached 11.81¢ per $100 last year, up slightly from 11.76¢ in 2015, the Nilson Report said.
Fraud in all other countries combined amounted to $13.80 billion, equal to 5.69¢ per $100 in volume, up from 5.55¢ the prior year. Brazil, Canada, Mexico, and Russia have greater fraud problems than the U.S. in terms of basis points of total volume.
"Fraud fighting is improving in the U.S., while the criminals are doing better outside the U.S.," said David Robertson, publisher of The Nilson Report, in a statement.
Card issuers worldwide experienced $16.13 billion or 70.7% of gross fraud losses worldwide. The remaining $6.67 billion in fraud losses were incurred by merchants, their acquirers, and ATM acquirers.
According to the Nilson Report, losses from counterfeit cards were down in the U.S. and worldwide as EMV cards and EMV-enabled POS terminals and ATMs continued to provide an effective defense. In the U.S., issuer losses from counterfeit cards were almost 60% below 2015 levels.
Merchant losses to fraud have been increasing as a percentage of total fraud losses. EMV, which helps issuers cut fraud losses from in-store transactions, can't protect mail order or telephone order or ecommerce merchants.
The Nilson Report said American Express, Diners Club/Discover, JCB, Mastercard, Visa, and Union Pay - the global general-purpose brands - accounted for $26.044 trillion or 81.7% of total worldwide card volume in 2016. Global brand fraud reached $20.18 billion last year, up 10.3% from $18.30 billion in 2015. Fraud in 2016 was equal to 7.75% of every $100 in global brand volume, up from 7.12% in 2015, when global brand volume was $25.718 trillion. Global brand cards incurred 88.5% of total gross fraud losses worldwide for all types of cards in 2016.
By 2021, card fraud worldwide is expected to total $32.69 billion, even though fraud as a percent of every $100 is predicted to decline to 7.02¢, the Nilson Report forecast.