Skimming fraud losses drop 27 percent year-over-year, setting new recorded low.
TORONTO, February 25, 2016 – Fraud numbers released today by Interac Association (“Interac”) show that Interac Debit losses, due to skimming, have continued a six year drop setting a new record low of $11.8 million in total losses to financial institutions in 2015. This reflects a 27 percent decrease from the previous year, when fraud losses amounted to $16.2 million in 2014. In the rare occurrence of fraud, consumers are fully protected through the Interac Zero Liability Policy.
Fraud exploitation occurring in Canada accounted for only $2 million, or 17 percent of total losses – a drop of 40 percent from the $3.4 million of domestic fraud reported last year. The number of cardholders that were reimbursed has also been drastically cut to 25,000 Interac Debit cards, from a high of 239,000 in 2009.
“With only $2 million of fraud losses occurring within Canada, we are having tremendous success locking down the Canadian payments space and preventing criminals from committing Interac debit card fraud,” said Mark Sullivan, Head, Fraud Market Management, Interac Association/Acxsys Corporation. “Our world-class policies and technologies set the standard for debit card security and send a clear message to criminals: we will not tolerate fraud on the Interac network.”
In 2008, the Canadian payment card industry began a widespread migration to chip technology, which enabled Interac debit cards to store and process data with greater security. Unlike magnetic stripe-based debit cards, Interac chip debit cards use cryptography to communicate with the point-of-sale terminal to carry out security checks and ensure card validity. Since the migration to chip technology in 2009, the Interac network has seen a drop of 92 percent from fraud losses due to skimming ($142 million in 2009 versus a low of $11.8 million in 2015).
“Based on the Interac debit card fraud losses that occurred in 2015, the vast majority – $9.8 million – stemmed from exploitation at magnetic stripe devices outside of Canada on other network systems, not on the Interac Network,” said Sullivan.
Finding it increasingly difficult to commit fraud on Interac debit cards in Canada, criminals have begun migrating their fraudulent payment card activity to international non-chip environments and card-not-present exploitation on credit cards and other networks’ debit products.
Chip technology is the backbone of Interac Flash, the contactless enhancement of Interac Debit. As a result, Interac Flash enabled cards have increased protection against skimming, counterfeiting, and transaction replay types of fraud, including electronic pick-pocketing. While not all contactless payments products are created equal, Interac Flash has all the same security features as Interac Debit, including EMV-based chip processing, Interac Zero Liability, plus the added protection of small transaction limits. Typically, no single transaction can be more than $100 and the total spend can not exceed $200 before the cardholder must enter their PIN.
While the number of Interac Debit and Interac Flash cards in market is growing, fraud is continually shrinking. Of all the active debit cards last year, only 0.09 percent of cardholders were affected by fraud. In 2015, more than $347 billion flowed through the Interac network across 5.91 billion transactions. When you compare the fraud numbers, 0.003 percent of total transaction amount was fraudulent with only 0.0005 percent occurring inside Canada.
“As leaders in fraud prevention and detection, Canadians should feel exceptionally confident using Interac products and services,” said Sullivan. “As our data shows, Interac Debit and Interac Flash are among the safest ways to pay using a payment card.”
About the Interac Zero Liability Policy
You will not be liable for losses resulting from circumstances beyond your reasonable control when using Interac Debit, Interac Flash, cross-border debit and Interac Online service. This includes losses resulting from technical errors, system problems or fraud.
The Canadian Code of Practice for Consumer Debit Card Services is embedded in the Interac rule framework. This means that financial institutions who offer these Interac products must provide zero liability for these Interac products. The specific terms are outlined in financial institution client agreements. If you experience an issue with these Interac products, your financial institution will deal with the matter directly, as the financial institution will be responsible for reimbursing you for your losses resulting from circumstances beyond your reasonable control.
About Interac Association and Acxsys Corporation
Interac is Canada’s leading payment brand. Together, Interac Association and Acxsys Corporation operate an economical, world-class debit system with broad-based acceptance, 24/7 reliability, security and efficiency. The brand is chosen an average of 13 million times daily to pay and exchange money. Interac products and services securely connect people to their money at the ABM through Interac Cash, at retailers across Canada through Interac Debit and the US, and online through web based services – Interac Online for online purchases, Interac e-Transfer for person-to-person payments, and Interac e-Transfer bulk disbursement for commercial payments. In addition, Interac Flash, the secure contactless enhancement of Interac Debit, is in widespread use at retailers across Canada and provides the service for mobile NFC proximity payments. The organization is also a leader in the prevention and detection of fraud.