Lipis Advisors’ Post

A key takeaway from the joint payment fraud report by the European Central Bank (ECB) and the European Banking Authority (EBA) is that the implementation of Strong Customer Authentication (SCA) under PSD2 has led to a reduction in fraud rates within the European Economic Area (EEA), compared to non-EEA regions where this requirement is not enforced. Looking forward, the implementation of Verification of Payee (VoP) in the near future is expected to further enhance security and reduce fraud risks even more effectively.

𝗘𝘂𝗿𝗼𝗽𝗲𝗮𝗻 𝗕𝗮𝗻𝗸𝗶𝗻𝗴 𝗔𝘂𝘁𝗵𝗼𝗿𝗶𝘁𝘆 (𝗘𝗕𝗔) 𝗽𝘂𝗯𝗹𝗶𝘀𝗵𝗲𝗱 𝗗𝗿𝗮𝗳𝘁 𝗢𝗽𝗶𝗻𝗶𝗼𝗻 𝗼𝗻 𝗻𝗲𝘄 𝘁𝘆𝗽𝗲𝘀 𝗼𝗳 𝗽𝗮𝘆𝗺𝗲𝗻𝘁 𝗳𝗿𝗮𝘂𝗱 𝗮𝗻𝗱 𝗽𝗼𝘀𝘀𝗶𝗯𝗹𝗲 𝗺𝗶𝘁𝗶𝗴𝗮𝗻𝘁𝘀 🔍 The 'Opinion on new types of payment fraud and possible mitigants' discusses the following key points: 1. The European Banking Authority (EBA) has analyzed fraud data for the year 2022 and gained insights into fraud patterns, including new types of fraud such as those associated with instant payments, which have higher fraud rates than traditional credit transfers. 2. Despite the successful implementation of Strong Customer Authentication (SCA), fraudsters have adapted and developed more complex fraud techniques, particularly using social engineering methods. 3. The EBA has provided general comments on the observed fraud trends and suggests possible measures for the EU co-legislators and the Commission to consider. 4. The data and observations presented in the Opinion are based on fraud data collected by the EBA and the European Central Bank (ECB) for 2022, with the exception of data on mail order and telephone order (MOTO) transactions and instant payments, which are based on a separate 2023 survey conducted by the EBA through national competent authorities (NCAs) and national central banks with H1 2022 as the reference period. 5. The EBA has identified specific scenarios in which Payment Service Users (PSUs) or Payment Service Providers (PSPs) can be held liable for fraud, such as when a PSU has made a payment to a fraudster without reasonable grounds for believing in the legitimacy of the payee or when a PSU has disregarded warnings regarding a specific fraud type. 6. The EBA has noted high levels of fraud for certain payment instruments, geographic dimensions, jurisdictions, or combinations thereof, even after the implementation of SCA.    

SCA's Impact on Reducing Payment Fraud Today, the European Central Bank (ECB) and the European Banking Authority (EBA) published a joint Report on Payment Fraud revealing some important insights: 💰 The total value of payment fraud across the EEA was €4.3 billion in 2022 and €2.0 billion in the first half of 2023. Most fraud involved credit transfers and card payments. 🔒 Strong Customer Authentication (SCA) requirements have been highly effective. Fraud rates for SCA-authenticated transactions are significantly lower, especially for card payments. In fact, card fraud rates are ten times higher for transactions outside the EEA where SCA isn’t mandatory. 🌍 Most card fraud (71% of total value in the first half of 2023), along with a large share of credit transfer and direct debit fraud (43% and 47% respectively) involved cross-border transactions. SCA is proving that strong regulations can make a big difference in protecting our financial transactions. A big thank you to the ECB and EBA for their continued efforts and insights in making our payment systems safer and more secure. The full report can be found here

The European Banking Authority (EBA) and the European Central Bank (ECB) have jointly published the 2024 Report on Payment Fraud, providing a critical analysis of data from the European Economic Area (EEA). The report offers a comprehensive overview of fraud levels across credit transfers, card payments, direct debits, cash withdrawals, and e-money transactions. It also details the role of Strong Customer Authentication (SCA) in mitigating fraud risks, underscoring the importance of this security measure for payment service providers (PSPs) and users alike. Below are the key findings, particularly focusing on the evolving landscape of payment fraud and the vital role of SCA in ensuring secure transactions https://lnkd.in/d7M4uwFX

The European Banking Authority (EBA) and the European Central Bank (ECB) published a joint Report on payment fraud data. The report assesses payment fraud reported by the industry across the EEA, which amounted to €4.3bn in 2022 and €2.0bn in the first half of 2023. The Report confirms the beneficial impact of #SCA on fraud levels. The Report examines the total number of payment transactions and the subset of fraudulent transactions in terms of value and volume. In addition to the aggregated values, the Report also presents data based on volumes and also sorted by type of payment instruments, i.e. credit transfers, direct debits, card payments, cash withdrawals, and e-money transactions. The total value of fraudulent credit transfers, direct debits, card payments, cash withdrawals and e-money transactions in the EEA amounted to €4.3 billion in 2022 and €2.0 billion in the first half of 2023. #SCA-authenticated transactions featured lower fraud rates than non-SCA transactions, especially for card payments, both in terms of values and volumes. Furthermore, fraud shares for card payments, both in terms of values and volumes, were 10 times higher when the counterpart is located outside the EEA, where the application of SCA is not legally required and may therefore not have been requested. Hence, the report confirms the beneficial impact of the #SCA requirements that were introduced by the PSD2 and the supporting technical standards that the EBA had issued in 2018 in close cooperation with the ECB. https://lnkd.in/d_5WccwZ

Important Insights from the Latest EBA & ECB Payment Data Report. The joint report from the EBA and ECB highlights key findings on payment trends and fraud for H1 2022, H2 2022, and H1 2023. Here are the key takeaways: 🔍 Scope & Coverage: - Analysed data on credit transfers, direct debits, card payments, cash withdrawals, and e-money transactions across all EU/EEA countries. - Focused on total payment transactions and fraudulent transactions in value and volume. 💰 Fraud Analysis: - Total payment fraud in 2022: EUR 4.3 billion; H1 2023: EUR 2.0 billion. - Major fraud types: Credit transfers and card payments. - H1 2023: EUR 1.131 billion in fraudulent credit transfers; EUR 633 million in card fraud. 📊 Fraud Rates: - The highest fraud rates were observed in card payments (0.031% value, 0.015% volume) and e-money transactions (0.022% value, 0.012% volume). - Lower fraud rates in direct debits, cash withdrawals, and other instruments. 💳 Card Fraud Insights: - Predominantly remote transactions. - Main causes: Lost/stolen cards and card details theft. - SCA has a significant impact, especially within the EEA. 🌍 Geographical Insights: - Most transactions were domestic, but cross-border fraud was significant, especially outside the EEA. 🔐 Security Measures: - SCA shows a positive impact, with lower fraud rates for authenticated transactions. - Higher fraud rates observed for transactions using SCA exemptions. 📈 Liability & Loss Distribution: - Varies by payment instrument and country. - PSUs bore significant losses, especially in credit transfers and card payments. 📉 Outlook: - Stable fraud trends due to SCA and other industry measures. - Continuous monitoring by EBA and ECB to enhance payment security. #Payments #Fraud #FraudPrevention #Fintech #EBA #ECB #PSD2 #SCA #PaymentSecurity https://lnkd.in/dnrnDX2t

Some nuggets from the recent EBA & ECB report on payment fraud across Europe: 🔐 SCA has been a force for good and is effective at preventing fraud 💳 card payments have by far the highest fraud rates both in value and volume: 📈 0.031% in H1 2023, increasing from 0.026% in H1 2022 or 7.31 million fraudulent transactions out of a total of 48.77 bn total card payments 📱 credit transfer fraud rate by comparison is significantly lower at 0.003% (or 616k fraudulent transfers out of total of 21.81 bn) 💰 credit transfers are often used for high-value payments (AOV €6485), which means that the average value of of a fraudulent credit transfer is higher for credit transfers vs other types of payments, but still significantly lower than the AOV, at €1835 #payments #fraud #cardpayments #report #openbanking https://lnkd.in/dwFMUKUe

📢 **Joint Report on Payment Fraud: ECB and EBA** 📅 **Date:** 01/08/2024 💶 **Fraud in 2022:** €4.3 billion 💶 **Fraud in H1 2023:** €2.0 billion 🔒 **Strong Customer Authentication (SCA) effective against fraud!** The joint report by the European Central Bank (ECB) and the European Banking Authority (EBA) highlights the fraud data reported by payment service providers in the European Economic Area (EEA). 🔹 **Most Affected Payment Instruments:** - **Bank transfers** - **Card payments** (majority in volume) 🔹 **Fraud Rates in H1 2023:** - **Card payments:** 0.031% of total value, 0.015% in volume - **Electronic money transactions:** 0.022% in value, 0.012% in volume - **Bank transfers:** 0.001% in value, 0.003% in volume 🔹 **Impact of SCA:** - Transactions authenticated by SCA show lower fraud rates, especially for card payments. - Fraud rates are ten times higher for transactions outside the EEA. 🔹 **Distribution of Fraud Losses (H1 2023):** - **Card payments:** 71% of losses involve cross-border transactions. - **Bank transfers:** 43% of losses. - **Direct debits:** 47% of losses. 🔹 **SCA Exemptions and Impact on Fraud:** Certain exemptions (e.g., low value, trusted beneficiaries) show higher fraud rates than others (e.g., secure corporate processes). 🔹 **Distribution of Responsibility for Losses:** - **Users of payment services:** 45% of losses for card payments, 51% for cash withdrawals, over 80% for bank transfers. The report emphasizes the importance of remaining vigilant against fraud and the crucial role of strong authentication. The widespread adoption of RTS standards for SCA has had a positive effect on reducing fraudulent payments. 📍 **Full Source:** [ECB Press Release](https://lnkd.in/eXzf8XfM) 📊 **#Fraud #PaymentSecurity #ECB #EBA #SCA #PSD2 #CyberSecurity**

The European Banking Authority (EBA) and the European Central Bank have released recently this fantastic report showing the state of Fraud trends across the European Union. Some of the main takeaways: 💰 Payment fraud in the EEA amounted to EUR 4.3 billion in 2022 and EUR 2.0 billion in H1 2023. 💳 Credit transfers and card payments are the main sources of fraud, with EUR 1.131 billion and EUR 633 million respectively in H1 2023. 💸 Card fraud predominantly occurs in card non present transactions, accounting for 82% of the value in H1 2023. 👮🏽♂️ Strong Customer Authentication (SCA) is applied to the majority of electronic payments, reducing fraud rates. 🌍 Fraud rates for card payments are significantly higher when the counterpart is outside the EEA. ✈ Cross-border transactions account for a significant share of fraud, with 71% of card fraud value being cross-border. 👨🏽💻 Manipulation of the payer is a significant cause of fraudulent credit transfers, accounting for 57% of the total value in H1 2023. Link to full report in comments. *manipulation of the payer refers specifically to the act where the payer initiates a fraudulent transaction. This coercion, which involves the payer being influenced to act against their own interests, is often a step in the fraud process, typically resulting in the fraudster initiating the payment at a subsequent stage.

As snotty as I can be in my commentary sometimes, I try to keep an open mind when reading any new fraud report. If I'm going to say something crummy, I at least want the report to have a fair shake. Reading this Opinion on payment fraud (https://lnkd.in/gttFSua3) from the European Banking Authority (EBA) was a tough one for me though. Not because it's bad, but because it was worded in a way that just riled me. "Oh really? YOU figured out that instant payments present a higher risk of fraud? YOU figured out the same thing about cross-border payments? Thank goodness for YOU." I did calm down eventually, and the report is fine. This was a me problem, not a report problem. The report basically summarizes what has been covered over the last couple of years around payment fraud. I don't think anything in the report will blow anyone's mind, and some things just don't make sense (transaction monitoring or authentication don't help when social engineering has occurred and the true consumer chooses to make a bad payment), but it's still helpful to have a concise summary of all the findings and opinions. EBA publishes Opinion on new types of payment fraud and possible mitigations (https://lnkd.in/gWwvdBve) #fraud #fraudreport #fraudmanagement #fraudprevention #payments #paymentfraud #banking #banks #instantpayments #appfraud