Locking Down the Canadian Payments Space Through Fraud Prevention and Detection

We know that Canadians work hard for their money and, as Canada’s first and only domestic debit card network, Interac Association has a responsibility to help protect it. Stories about electronic pickpocketing, retail data breaches, and skimming are all over the news. It’s no wonder that a recent national survey, conducted on behalf of Interac Association, shows that 41 percent of Canadians are worried about payment card fraud. This recent omnibus survey, commissioned by Interac and conducted among a representative sampling of 1,000 adults across Canada, revealed key aspects of Canadians’ Perceptions of Fraud.

  • Two out of five (41%) Canadians cite they are concerned about payment card fraud (credit or debit).  When it comes to debit card fraud, 43% of Canadian cardholders are concerned versus 50% for credit card fraud (this includes concern about fraudulent purchases, stolen or unauthorized use of the card, and privacy).
  • Awareness is highest for fraud that could occur when shopping on-line (77%), followed closely by awareness of skimming (73%). Residents of B.C. (82%), the Prairies (80%), and Ontario (80%) are more aware of on-line shopping fraud than those of other regions. Despite recent media coverage of data breaches at major retailers in Canada and the U.S. (e.g., Target, Home Depot), a relatively smaller proportion of Canadians (68%) are aware of this type of retail data breach fraud. Awareness of electronic pickpocketing (58%) ranked lowest.
  • Canadians are most concerned about skimming-related fraud for its potential to affect their debit cards (49%) and credit cards (47%), and least concerned about electronic pickpocketing (40% for debit cards, 38% for credit cards). On-line shopping-related fraud elicits the lowest level of concern in terms of debit card vulnerability (38% of respondents said they are concerned).
  • When looking at trends surrounding age, our survey showed that Canadians aged 35 have less awareness and concern about payments-related fraud (skimming, online shopping, electronic pickpocketing, and retail data breaches). The majority of Canadians (58%) perceive banking cards to be more secure than credit cards. This perception is held most strongly by younger Canadians, with 65% of Canadians aged 18-34 confident in the secure nature of debit cards over credit cards (compared to 55% among those 35+).

But we have good news for those concerned around how our world-class fraud risk solutions are positively impacting the criminals’ ability to benefit. Recently, our organization reported that Interac debit card fraud losses, as a result of skimming, are at a record low in 2014 – dropping 45 percent year-over-year to $16.2 million in transactional losses. And within this number, only $3.2 million is from skimming fraud occurring within Canada. These numbers are encouraging when you take into account the bigger picture: in 2014, the Interac network processed 4.9 billion transactions worth more than $211 billion.

Despite this good news, it’s important to remember that we all have a role in helping to eradicate payment card fraud. With the migration to chip technology nearly complete in Canada, we have an extremely safe payments system. But criminals are always looking for opportunities to commit fraud. We see that criminals are moving their fraud activity to international exploitation in non-chip environments, as well as card-not-present (i.e., over the Internet and telephone) exploitation on credit cards and other debit networks.

At Interac Association, we want to stop the occurrence of fraud and endeavor to create payment solutions that offer the strongest protections for Canadian debit cardholders. Our investments in technology, along with our policies, sophisticated fraud prevention and detection efforts, and partnerships – such as the valued relationship with have with law enforcement – have had a tremendously positive impact on Interac debit card fraud losses in Canada.

Our multi-faceted partnership with law enforcement enables us to assist with investigations and provide educational opportunities, such as modules featured on the Canadian Police Knowledge Network (CPKN). Recent modules feature topics such as payment card data security, which discusses the underground economy behind data security breaches and card-not-present fraud.

Our upcoming Interac Risk and Cybercrime Conference in April will bring together industry experts and educators who specialize in the areas of fraud risk and cybercrime, both in the Canadian and U.S. market.  Topics will include the changing landscape of payment card fraud and provide valuable information to aid in the prevention, detection, investigation and prosecution of these criminals. The conference takes place in Ottawa from April 29 to 30, 2015. For more information or to register, visit www.interac.ca/en/cybercrime-conference-event-details-2015.

As our record low 2014 fraud losses show, the Interac Network operates on an extremely safe system. But we must work with our trusted partners day in, day out to lock down the Canadian payments space and make it increasingly more difficult for criminals to commit Interac debit card fraud.

Mark Sullivan is the Head of Fraud Risk Programs at Interac Association / Acxsys Corporation. He can be reached at msullivan@interac.ca.

Statistics relating to other payment scheme fraud can be found at CBA.ca


Click on the below chart to see the Interac debit card fraud losses statistics.