PINcept.com: Card Fraud in the United States: The Case for Encryption

Card Fraud in the United States: The Case for Encryption

A New Report From Aite Group

Card Fraud in the United States: The Case for Encryption

The card industry should focus on encryption technologies, cutting off the source of card data for criminal networks.

A new report from Aite Group, LLC provides directional guidance on the most effective forms of card fraud management for the United States today. Based on interviews with more than 30 fraud management professionals worldwide, the report provides an overview of the U.S. card fraud landscape. It examines available fraud prevention solutions and proffers an in-depth analysis of implementation cost and anticipated success rate.

Card fraud costs the U.S. card payments industry an estimated US$8.6 billion per year. Though it comprises only 0.4% of the US$2.1 trillion in total yearly U.S. card volume, this area remains troubling for the industry. Fighting card fraud effectively involves triage and telepathy - picking appropriate battles to fight while anticipating fraudsters' next steps based on the rapidly evolving technological landscape. Card technologies in the United States are unlikely to be universally upgraded anytime soon due to prohibitively high implementation costs and the loss of signature interchange. Given the relative speed and cost efficiency for deployment, the most practical method of mitigating card fraud today would be based around end-to-end encryption.

"Criminals need access to deep seams of card data," says Nick Holland, senior analyst with Aite Group and author of this report. "Cutting off the supply of data via a national-level deployment of end-to-end encryption would significantly reduce counterfeit and lost and stolen card fraud."

This 45-page Impact Report contains 25 figures. Clients of Aite Group's Retail Banking service can download the report by clicking on the icon to the right.