|Source: ACI Worldwide infographic. Nearly a third of consumers have experienced card fraud in the past five years.|
Thirty-six percent of consumers in Singapore have experienced card fraud in the past five years, according to new global benchmark data* from ACI Worldwide and Aite Group. Singapore has the sixth highest rate of card fraud globally, and the third highest in Asia Pacific, according to new ACI Worldwide Global Consumer Fraud Survey.
ACI Worldwide powers electronic payments for more than 5,100 organisations around the world. Its global fraud study of more than 6,000 consumers across 20 countries revealed that, compared to ACI’s 2014 benchmark study, card fraud rates —unauthorised activity on three types of payment cards (debit, credit and prepaid)— has risen 8% in Singapore.
Fourteen out of the 17 countries surveyed both years reported an increase in card fraud between 2014 and 2016. Risky behaviours, such as leaving a smartphone unlocked when not in use, have a direct correlation to fraud—and the overall risk for fraud is rising due to the global increase in smartphone and tablet usage.
In the Asia-Pacific, Australia, India and Singapore experience the most card fraud:
· In 2016, Australia leads the way at 40%, followed by India at 37% and Singapore at 36%.
· Consumers in Thailand, India and Indonesia exhibit the riskiest behaviours among countries in the Asia-Pacific, compared to their counterparts in Australia, New Zealand and Singapore:
- Over a third (36%) in Thailand, 34% in India and 31% in Indonesia left smartphones unlocked when not in use.
- Four in 10 (43%) in Thailand, 30% in India and 29% in Indonesia banked or shopped online on computers without security software or on public computers.
- A quarter in Thailand, 20% in India and 19% in Indonesia responded to emails or calls asking for bank details.
- One in five (21%) in Indonesia and 19% in India and Thailand respectively kept a PIN with the card.
“Card fraud rates are on the rise in the majority of countries included in the survey,” said Ben Knieff, Senior Research Analyst, Aite Group. “The data shows that consumer education and customer service remain a challenge for financial institutions globally, as risky behaviour has a direct correlation to experiencing fraud.”
With 2,260 confirmed data breaches in 2015 alone, security remains top-of-mind within the financial services industry and among consumers. Despite the adoption of fraud analytics solutions by financial institutions and merchants—along with EMV in most countries — card fraud rates are on the rise in many parts of the world.
“This study confirms that card fraud remains an issue of deep concern for consumers around the globe,” said Andreas Suma, VP and Global Lead, fraud and data, ACI Worldwide. “It’s no surprise that there is a direct correlation between fraud and lower consumer trust and card loyalty, including a primary contributor toward ‘back of wallet’ behavior. And as this data illustrates, it’s more critical than ever for financial institutions to implement and actively maintain effective fraud prevention solutions that address fraud, security and customer experience needs.”
“In the Asia-Pacific region, there is a clear correlation between risky behavior and fraud incidents,” said Giselle Lindley, Senior Fraud Consultant, ACI Worldwide. “This reveals an opportunity for consumer education focused on how consumer behavior affects the potential for fraud to occur. This will not only help reduce the incidents of fraud, but also empower consumers to gain confidence in their ability to protect themselves from fraud.”
Consumer trust is improving, but loyalty continues to lag
· Four in 10 consumers globally who received replacement cards as a result of a data breach or fraudulent activity use their replacement card less than they used their original card, resulting in lost interchange and interest revenue from decreased usage. This ‘back of wallet’ behaviour is especially prevalent in Asia-Pacific countries: 69% of consumers in Indonesia opt to use cash or an alternative payment method over credit or debit card following the card fraud incident
· Consumers in Singapore and Thailand (13% each) express the highest lack of confidence in financial institutions’ abilities to prevent fraud, compared to other Asia-Pacific countries.
· Consumers in the Asia-Pacific, especially those in Singapore, are most concerned about identify theft, data breaches resulting in compromised account numbers and online banking fraud.
· About half (48%) respectively in Thailand and India, and 44% in Indonesia switch financial institutions after a fraud experience. These high rates of customer attrition are costly to financial institutions
· Surprisingly, countries with higher fraud rates and lower levels of customer aftercare do not show high rates of moving cards to back of wallet. Seven in 10 (69%) in Indonesia, 58% in India and 56% in Thailand choose to use cash or alternative payment methods following card fraud only in some situations.
A detailed analysis of the 2016 Global Consumer Fraud Report will be presented via webinar at 9am and 10pm July 27 Singapore time. Register for one of the webinars or to receive a complimentary copy of the two-part report.
*ACI Worldwide conducted online quantitative market research in Q216 and surveyed 6,159 consumers. The study was conducted in 20 countries in the following regions:
· The Americas (North and South America): Brazil, Canada, Mexico, and the US
· EMEA (Europe, the Middle East, and Africa): France, Germany, Italy, the Netherlands, South Africa, Sweden, the UAE, and the UK
· The Asia-Pacific: Australia, India, Indonesia, New Zealand, Thailand and Singapore.