The U.S. accounted for 51% of global payment card fraud costs in 2013, according to BI Intelligence estimates.
Here are the key points for 2013:
- The cost of global payment card fraud grew by 19% to reach $14 billion.
- The cost of U.S. payment card fraud grew by 29% to $7.1 billion.
- In the rest of the world, card fraud grew by 11% to $6.8 billion.
The chart below is based data from the Nilson Report, which looks at fraud losses affecting issuers, merchants, and acquirers. Nilson covers fraud for all categories of payment cards: credit, debit, prepaid general purpose, and private label (e.g., retailer-specific cards). We used Nilson's numbers for 2009 through 2012, and arrived at our own numbers for 2013, after looking at credit card market data and news reports.
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There are two reasons why payment card fraud is so enormous in the United States:
- The U.S. accounts for a significant proportion of global payment card volume. That said, U.S. share of fraud is greater. For example, in 2012, the U.S. accounted for 23.5% of payment card volume but 47.3% of payment card fraud, according to Nilson.
- The U.S. has not yet adopted the EMV or "chip card" standard popular elsewhere in the world. Chip cards are difficult to duplicate for fraudulent transactions, while magnetic stripe payment cards used in the U.S. are much easier to copy.
The U.S. suffered record-breaking data breaches at major retailers (most notoriously, Target) in 2013, which added about $500 million to the total fraud cost.
We expect the U.S. share of global card fraud to decline in coming years, as the country moves to the EMV standard.
On the other hand, fraudulent card-not-present transactions — i.e., e-commerce fraud — will likely increase because criminals won't be able to easily duplicate EMV payment cards.