Fraud on card transactions up 9.2% in FY21

  • By Zilla Efrat

Increased online spending during COVID-19 lockdowns contributed to a 9.2 per cent rise in fraud on payment card transactions in the 12 months to 30 June 2021 (FY21), according to data released by Australian Payments Network yesterday.

Total spending on cards rose 5.4 per cent to $847.3 billion during the same period. The fraud rate in FY21 was 57.8 cents per $1,000 spent – up from 55.8 cents per $1,000 in FY20, but well below the rate of 73.8. cents in FY18.

Card-not-present (CNP) fraud surged 12.3 per cent to $442 million in FY21 as e-commerce thrived in some parts of Australia. In FY21, CNP fraud accounted for 90 per cent of all fraud on Australian cards.

CNP fraud involves valid card details being stolen and used to make purchases or other payments without the card being present at the point of sale, usually online.

Lost-and-stolen card fraud fell 9.2 per cent to $28 million, and counterfeit/skimming fraud was down 37.3 per cent to $8.9 million, an acceleration of a long-term downward trend for this type of fraud.

AusPayNet CEO Andy White says rising e-commerce volumes underscore the need for industry coordination to target the activities of fraudsters.

“Online transactions continue to grow strongly and inevitably, this attracts the attention of organised fraud groups.

“Industry-wide efforts to mitigate CNP fraud will remain critical, but we all need to remain vigilant when transacting online.”

The end of FY21 coincided with the end of the second full year of operation of the industry’s CNP Fraud Mitigation Framework. Under the framework, merchants who consistently exceed agreed fraud threshold targets must introduce strong customer authentication. The framework also encourages secure technologies such as real-time monitoring, machine learning and tokenisation.

“We expect to see the full benefit of the CNP framework as we emerge from the pandemic,” says White.

"Alongside our focus on CNP fraud, last month we launched our scams strategy. Over the coming year, we look forward to working with industry to reduce the impact of scams on vulnerable businesses and individuals.”