Cards on the table

A few thoughts on the UK credit card, debit card and online banking fraud figures released this week by The UK Cards Association. 

Fraud losses on UK debit and credit cards fell seven per cent in 2011 to £341 million, an 11-year low. This has understandably made a lot of headlines in the last couple of days. But little attention has been paid to the sizeable increase in cheque and telephone banking losses last year.

The reduction in card fraud can be attributed to such initiatives as MasterCard SecureCode, Verified by Visa and American Express SafeKey; continued upgrading of the chips on UK cards; and increased roll-out of chip and PIN abroad. All of which have made the fraudster's life that little bit more difficult and sent him/her off to other areas. Hence the increase in cheque and telephone banking losses.

Online banking fraud losses dropped 24 per cent from £46.6 million in 2010, to £35.4 million in 2011. Factors contributing to this fall include: customers better protecting their own computers with up-to-date anti-virus software; banks’ use of sophisticated fraud detection systems; and banks providing customers with additional software and hand-held devices to log on to internet banking. The press release I received notes that this decrease has occurred despite a continuing rise in phishing attacks and attacks involving malware. Phishing attacks were up 80 per cent from 2010.

The rise of phishing shouldn't come as a surprise. Whilst we should welcome the fall in online banking fraud, we should also remember the increasing sophistication of cybercriminals. For many of them, it's not about what was taken in 2011 or indeed what they can get their hands on this year. They're playing the long game, stockpiling with an eye on two or three years from now.

The swinging sixties

 It's been a week of birthdays. First the humble ATM machine clocked up its 44th year of existence (see previous blog post for more on that). And then Barclaycard announced that 45 years ago it introduced the UK's first credit cards.

My Dad is forever going on about the swinging sixties, greatest decade in the history of mankind (to quote the mighty Withnail and I). And so on...Looking at some of the facts and figures, I'm inclined to believe him. In the year that the credit card arrived, England won the World Cup, The Beatles and The Stones were riding high, the average price of a house was £3,840, petrol cost just 7p a litre and you could go to cinema for 10p - 10p! You need a bank loan to buy a ticket and popcorn these days, all for the privilege of seeing Shia Labeouf and a bunch of robots causing mayhem.

Within a year of the credit card launch, Barclaycard had attracted a million customers. Today the figure is 11.2 million of a total of 31.2 million (UK Cards Association, 2010) credit cardholders in the UK. Last year, two billion transactions were made to the tune of £136 billion. But the credit card's big day was somewhat undermined by figures from the British Retail Consortium (BRC), suggesting that cautious customers are increasingly turning to cash and debit cards. The proportion of transactions using credit cards fell by 12.9 per cent in a year while those involving debit cards rose by 15.8 per cent. Cash was used for a greater proportion of overall retail spending as the average amount spent in each cash transaction increased by 13 per cent to £12.93.

It seems that pesky old cash won't go away, despite the best efforts of those with power and influence to burn.