Credit card fraud occurs when a person uses your credit card or credit card information without having permission to do so, and it’s a multi-billion dollar market. Each year, insurance companies fork out billions to cover losses, and even then, businesses still have to pay the cost on occasion.
All this theft is also factored into fees, so eventually, consumers end up paying for it.
Credit card fraud entails buying items with stolen account data, copying cards to make fraudulent purchases or social engineering hacks, where criminals get you to authorise a transaction.
Interestingly, 46% of global credit card fraud occurs in the US.
The cost of credit card fraud worldwide is quite astonishing. It’s estimated that total losses from credit card fraud globally will reach $43 billion by 2026.
This is not only a painful issue for the developed world, but even in the developing world, where businesses and customers run on even tighter margins and have to deal with rising inflation.
If we look at one of the leading markets in Africa in terms of credit card payments, South Africa, SABRIC’s Annual Crime Statistics Report for 2023 showed that an increase in financial crime resulted in the loss of nearly R3.3 billion.
Credit card fraud comes in many flavours
Credit card fraud can happen anywhere, to anyone, in any country. Credit card fraud also has an impact on people’s lives. Read on to find out more about credit card fraud. Let’s take a look at some popular types of card fraud.Card Not Present Fraud:
Card Not Present fraud is a fraudulent transaction that takes place where both the card and the cardholder are not present at the point of sale. If you experience CNP fraud, your card information is utilised for online fraudulent transaction,s although you still have your card.Lost Card Fraud:
A cardholder loses his/her valid issued credit or debit card and doesn’t have it anymore. A fraudster then performs a fraudulent transaction on this card.Stolen Card Fraud:
Stolen card fraud occurs when a validly issued debit or credit card is stolen from a legitimate owner. Fraudsters perform fraudulent transactions on this card.Account Takeover Fraud:
A scammer pretends to be the legitimate account holder and takes over the account and utilises it for their own gain. Scammers have access to personal information when they pose as the legitimate account holder. They pose as the legitimate account holder in order to apply for a replacement card. Once scammers receive the replacement card, they use it for fraudulent purposes.Counterfeit Card Fraud:
A bank doesn’t genuinely issue a counterfeit card. Criminals manufacture counterfeit cards in a fraudulent way. They utilise compromised card data in order to manufacture the counterfeit card and generally make use of card skimming devices to steal the information required for counterfeit card fraud.Not Received Issued Card Fraud:
Not Received Issued Card fraud relates to genuinely issued cards being intercepted before they reach authentic customers. Intercepted cards are used fraudulently by scammers. It’s important to be aware of this: anyone can become defrauded. Fraudsters can use any of these methods to steal your cards and defraud you. It can be stressful once you have been a victim of credit card fraud. Before you even know it, your credit card can be used by fraudsters to rack up thousands of rands. You can experience credit card fraud in-person, online, via email, or even telephonically. Here are some useful tips to help decrease credit card fraud:- Ensure that you don’t get help from anyone at the ATM.
- Don’t share your card PIN with anyone.
- Don’t let someone else use your card.
- Be aware of your surroundings when you perform a transaction at an ATM.
- Make sure to report lost and stolen cards straight away.
- Be sure to check your credit card statements often. Even a small transaction can be fraudulent. Be aware of any kind of suspicious activity on your credit cards. Flag anything that seems suspicious and reach out to your bank if you think you have been the victim of credit card fraud.
- If you notice any irregular transactions on your bank statements, you need to let your bank know.
- Check that you still have your card when you are making a payment.
- Shopping online? Only use your card to pay on secure websites.
- Destroy your credit card receipts before getting rid of them.
- Check that you get your own card when marking purchases at merchants.
- Keep your cards in a safe place.
- When transacting, check the ATM card slot to see that your card isn’t removed, skimmed and replaced without you knowing.
- Cut up or burn bank statements when throwing them out.
What about Virtual cards?
Virtual credit cards are digital versions of physical credit cards, these pre-funded cards make it easier to limit exposure to your funds and have become popular for those wishing to shop online. When you do online shopping, virtual credit cards protect your payment information as they mask your account information. So even if there is a data leak, your actual card details are not at risk.Are there advantages of having virtual credit cards?
- Virtual credit cards are easier to cancel than physical credit cards, helping to keep your account safer.
- Virtual credit cards can make online shopping easier.
- With a virtual credit card, you have total control over your spending.
- Virtual credit cards offer you convenience.
- Making an electronic payment is safer and more secure with a virtual credit card than with a physical credit card. This is because a virtual credit card makes use of encryption to restrict how much data is shared, decreasing the chance of fraud.
Merchant fraud and its effect on businesses
Any business can be affected by merchant fraud. Merchant fraud occurs when a person poses as a legitimate business to deceive customers and make illegitimate profits. Credit card fraud, a common type of merchant fraud, happens when thieves use stolen or counterfeit cards to buy items. When it comes to merchant fraud, stolen credit card numbers can be utilised to transact with fake businesses for the purpose of defrauding credit card companies. Merchant fraud happens often in e-commerce businesses because it is more difficult to verify online transactions and it is easier to verify in-person transactions. Global e-commerce retail is going to grow impressively. Global e-commerce retail is expected to increase to over $8 trillion by 2026. Absolutely mind blowing! This market is going to be huge! It is also worth it to note that payment fraud causes 3.1% of global e-commerce revenue to be lost. Payment fraud can really impact e-commerce businesses. That translates to billions lost annually, which could have gone to your business.Why use Bitcoin instead of credit cards to accept payments?
As the age-old meme goes, Bitcoin Fixes This!- When you make a payment with a credit card online or in-store, you are vulnerable. Card skimmers can steal your credit card information in a few minutes.
- Bitcoin has a secure network. Bitcoin payments are irreversible. You have to authorise a Bitcoin transaction with your private key, which is kept in your wallet.
- Accepting Bitcoin payments is beneficial for your business because you have less wait time for transactions, and you pay lower processing fees. Credit card providers charge fees to process payments.
- Bitcoin gives buyers a fast and secure way to pay for items.