2016 Global Consumer Card Fraud: Where Card …...2016 Global Consumer Card Fraud: Where Card Fraud...

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2016 Global Consumer Card Fraud: Where Card Fraud Is Coming From

JULY 2016

Ben Knieff

Research sponsored by:

2016 Global Consumer Card Fraud: Where Card Fraud Is Coming From July 2016

© 2016 Aite Group LLC. All rights reserved. Reproduction of this report by any means is strictly prohibited. 101 Arch Street, Suite 501, Boston, MA 02110 • Tel +1.617.338.6050 • Fax +1.617.338.6078 • [email protected] • www.aitegroup.com

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TABLE OF CONTENTS IMPACT POINTS .............................................................................................................................................. 4

INTRODUCTION .............................................................................................................................................. 5

METHODOLOGY ........................................................................................................................................ 5

GLOBAL CARD FRAUD SNAPSHOT .................................................................................................................. 7

FRAUD IN THE AMERICAS ............................................................................................................................. 15

RISKY BEHAVIOR ..................................................................................................................................... 15

REPLACEMENT CARDS............................................................................................................................. 18

CONSUMER ATTITUDES TOWARD FRAUD .............................................................................................. 23

FRAUD IN EUROPE, THE MIDDLE EAST, AND AFRICA ................................................................................... 25

RISKY BEHAVIOR ..................................................................................................................................... 25



FRAUD IN THE ASIA-PACIFIC ......................................................................................................................... 37

RISKY BEHAVIOR ..................................................................................................................................... 37



RECOMMENDATIONS ................................................................................................................................... 46

RELATED AITE GROUP RESEARCH ................................................................................................................. 47

ABOUT AITE GROUP...................................................................................................................................... 48

AUTHOR INFORMATION ......................................................................................................................... 48

CONTACT ................................................................................................................................................. 48

LIST OF FIGURES FIGURE 1: COUNTRIES SURVEYED .................................................................................................................. 6

FIGURE 2: CURRENT TOTAL CARD FRAUD RATES BY COUNTRY ..................................................................... 8

FIGURE 3: CURRENT CREDIT CARD FRAUD RATES ........................................................................................ 10

FIGURE 4: CURRENT DEBIT CARD FRAUD RATES .......................................................................................... 12

FIGURE 5: MULTIPLE FRAUD INCIDENTS ...................................................................................................... 13

FIGURE 6: CURRENT PREPAID CARD FRAUD RATES ...................................................................................... 14

FIGURE 7: RISKY BEHAVIOR IN THE AMERICAS ............................................................................................. 16

FIGURE 8: RISKY BEHAVIOR TRENDS IN THE AMERICAS ............................................................................... 17

FIGURE 9: RISKY BEHAVIOR AND FRAUD EXPERIENCED IN THE AMERICAS ................................................. 18

FIGURE 10: REPLACEMENT CARDS IN THE AMERICAS .................................................................................. 19

FIGURE 11: USE OF REPLACEMENT CARDS IN THE AMERICAS ..................................................................... 20

FIGURE 12: SATISFACTION WITH FINANCIAL INSTITUTION AFTER FRAUD IN THE AMERICAS ..................... 21

FIGURE 13: SWITCHING BEHAVIOR IN THE AMERICAS ................................................................................. 22

FIGURE 14: BACK-OF-WALLET BEHAVIOR IN THE AMERICAS ....................................................................... 22

FIGURE 15: CONSUMER TRUST IN FINANCIAL INSTITUTIONS IN THE AMERICAS ......................................... 23



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FIGURE 16: CONSUMERS’ FRAUD CONCERNS IN THE AMERICAS ................................................................. 24

FIGURE 17: RISKY BEHAVIOR IN EUROZONE ................................................................................................. 25

FIGURE 18: RISKY BEHAVIOR IN EMEA (NON-EUROZONE) ........................................................................... 26

FIGURE 19: RISKY BEHAVIOR AND FRAUD EXPERIENCED IN EUROZONE ..................................................... 27

FIGURE 20: RISKY BEHAVIOR AND FRAUD EXPERIENCED IN EMEA (NON-EUROZONE) ............................... 28

FIGURE 21: REPLACEMENT CARDS IN EUROZONE ........................................................................................ 29

FIGURE 22: REPLACEMENT CARDS IN EMEA (NON-EUROZONE) .................................................................. 29

FIGURE 23: USE OF REPLACEMENT CARDS IN EMEA .................................................................................... 30

FIGURE 24: SATISFACTION WITH FINANCIAL INSTITUTION AFTER FRAUD IN EUROZONE ........................... 31

FIGURE 25: SATISFACTION WITH FINANCIAL INSTITUTION AFTER FRAUD IN EMEA (NON-EUROZONE) ..... 31

FIGURE 26: SWITCHING BEHAVIOR IN EMEA ............................................................................................... 32

FIGURE 27: BACK-OF-WALLET BEHAVIOR IN EUROZONE ............................................................................. 33

FIGURE 28: BACK-OF-WALLET BEHAVIOR IN EMEA (NON-EUROZONE) ....................................................... 33

FIGURE 29: CONSUMERS’ TRUST IN FINANCIAL INSTITUTIONS IN EUROZONE ............................................ 34

FIGURE 30: CONSUMERS’ TRUST IN FINANCIAL INSTITUTIONS IN EMEA (NON-EUROZONE) ...................... 34

FIGURE 31: CONSUMERS’ FRAUD CONCERNS IN EUROZONE ....................................................................... 35

FIGURE 32: CONSUMERS’ FRAUD CONCERNS IN EMEA (NON-EUROZONE) ................................................. 36

FIGURE 33: RISKY BEHAVIOR IN THE ASIA-PACIFIC ....................................................................................... 38

FIGURE 34: RISKY BEHAVIOR TRENDS IN THE ASIA-PACIFIC ......................................................................... 39

FIGURE 35: RISKY BEHAVIOR AND FRAUD EXPERIENCED IN THE ASIA-PACIFIC ........................................... 40

FIGURE 36: REPLACEMENT CARDS IN THE ASIA-PACIFIC .............................................................................. 41

FIGURE 37: USE OF REPLACEMENT CARDS IN THE ASIA-PACIFIC ................................................................. 41

FIGURE 38: SATISFACTION WITH FINANCIAL INSTITUTION AFTER FRAUD IN THE ASIA-PACIFIC ................. 42

FIGURE 39: SWITCHING BEHAVIOR IN THE ASIA-PACIFIC ............................................................................. 43

FIGURE 40: BACK-OF-WALLET BEHAVIOR IN THE ASIA-PACIFIC ................................................................... 43

FIGURE 41: CONSUMERS’ TRUST IN FINANCIAL INSTITUTIONS IN THE ASIA-PACIFIC .................................. 44

FIGURE 42: CONSUMERS’ FRAUD CONCERNS IN THE ASIA-PACIFIC ............................................................. 45



4

IMPACT POINTS

This Impact Report, based on a Q2 2016 ACI Worldwide study of 6,035 consumers in

20 countries, provides an overview of respondents’ attitudes toward various types

of card fraud and discusses the actions they may take subsequent to a fraud

experience. Where applicable, it also compares these results with those from similar

ACI surveys in 2012 and 2014.

Of all cardholders—debit, credit, and prepaid—30% have experienced card fraud in

the past five years, a significant portion of cardholders.

After experiencing fraud, 40% of consumers use the replacement card less, at least

in some situations, than they used that card previously. This back-of-wallet behavior

is lost revenue for the financial institution.

In 2016, 17% of debit and credit card holders cite having experienced fraud multiple

times during the past five years, compared to 13% in 2014.

Consumers who are dissatisfied with how they are treated by their financial

institution after experiencing fraud sometimes change providers, resulting in a

global attrition rate of 20%. This highlights the importance of aftercare following a

fraud experience.

Fourteen percent of global consumers lack confidence that their financial institution

can protect them against fraud. While this varies from region to region, it

demonstrates some level of misunderstanding about what steps institutions take.

Fifty-four percent of global consumers exhibit at least one risky behavior, which puts

them at higher risk of financial fraud. Education about risky behaviors and what

consumers can do can help reduce fraud rates is sorely needed—banks must learn

how to help consumers help themselves.



5

INTRODUCTION

With 2,260 confirmed data breaches1 in 2015 alone and over 4 billion data records stolen since

2013,2 the security of the financial services value chain is a critical topic within the industry and

among consumers. At this point in time, the assumption should be that almost all users’

credentials and/or card information has been compromised. The underground economy for user

information has matured so much that it is indistinguishable from a legitimate economy. There

are various service providers, service-level agreements, and very efficient supply-demand-based

pricing. It no longer requires sophisticated computer science skills to perpetrate fraud, as most

everything required can be acquired off the shelf from the underground market.

This Impact Report, the first in a two-part series on how financial fraud affects consumers, will

look at consumer fraud experiences, perceptions of trust in financial institutions, and risky

consumer behaviors.3 The report looks at 20 different countries from the Americas; Europe, the

Middle East, and Africa (EMEA); and the Asia-Pacific. There are some broad trends among these

regions and the countries within them, and there are also some interesting outliers.

METHODOLOGY

ACI Worldwide, a global leader in electronic payments for financial institutions, retailers, and processors, conducted online quantitative market research in March 2016 and surveyed 6,035 consumers. The study was conducted in a total of 20 countries in the following regions:

The Americas (North and South America): Brazil, Canada, Mexico, and the United

States

EMEA: France, Germany, Hungary, Italy, the Netherlands, South Africa, Spain,

Sweden, the United Arab Emirates (UAE), and the United Kingdom

The Asia-Pacific: Australia, India, Indonesia, New Zealand, Singapore, and Thailand

China, Russia, and Poland were removed compared to 2014, and Spain, Thailand, and Hungary were added for 2016 (Figure 1).

There were some changes in methodology compared to the 2014 report that leads to some differences when comparing the two reports. The 2014 data was reanalyzed in 2016 to match the same methodology, so comparisons are apples-to-apples within the 2016 report, but not between the 2014 and 2016 reports.

1. Verizon, “2016 Data Breach Investigations Report,”

http://www.verizonenterprise.com/resources/reports/rp_DBIR_2016_Report_en_xg.pdf, accessed May 22, 2016.

2. “Breach Level Index,” http://breachlevelindex.com/#sthash.UU29yuUP.dpbs, accessed June 24, 2016.

3. See Aite Group’s report Global Consumers: Losing Confidence in the Battle Against Fraud, June 2014.

http://aitegroup.com/report/global-consumers-losing-confidence-battle-against-fraud



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Specifically, in 2016 the incidence of fraud was calculated based the population that actually owned a type of card (credit, debit, prepaid), whereas in 2014 the calculation was based on the entire population, irrespective of whether all individuals owned the particular type of card.

Figure 1: Countries Surveyed

Source: Aite Group research

In total, 6,159 consumers were included in the research: approximately 300 consumers, divided equally between men and women, participated in each of the 20 countries. Of the total, 6,035 own one or more type of payment card—credit card, debit card, prepaid card. This is the fourth time that ACI has fielded this type of survey, and comparative results are included from 2012 and 2014.

In each country, the data have a margin of error of approximately 5 points. Statistical tests of significance, where shown, were conducted at the 95% level of confidence.



7

GLOBAL CARD FRAUD SNAPSHOT

Card fraud includes unauthorized activity on the three main types of payment cards—debit,

credit, and prepaid. Card fraud can come from many different angles, including data breaches,

lost/stolen cards, social engineering, phishing attacks, and often a combination of these. Fraud

rates around the world vary greatly in different regions and countries.

Compared to the study fielded in Q1 2014, the rates of fraud among various countries have

moved, and fraud rates are increasing in many countries (Figure 2). In the 2016 study, Mexico

has the highest rate of credit card fraud at 51%, followed by the United States at 46%, and Brazil

at 46% (Figure 3).

Mexico has experienced a rocky road in implementing EMV, with challenges both on the issuer

and merchant sides of the equation. Bad actors take advantage of confusion and implementation

weaknesses, which drives this high fraud rate.

In the U.S., fraud rates are driven by the fact that it is a wealthy economy and that card

payments are the go-to payment method for most consumers. Combined with the prevalence of

online shopping and slow adoption of EMV, the U.S. is still a gold mine for criminals. Based on

other countries’ experience with EMV adoption, it is expected that card-not-present (CNP) fraud

will increase as the U.S. continues to migrate to EMV.

Brazil has its own challenges; with a faltering economy and a fragmented card payments

environment, it is an attractive market for criminals. Brazil is also a large market for online

shopping, but many e-commerce firms do not have strong controls for fraud prevention. There

are many opportunities to improve online security, such as 3-D Secure 2.0 and active real-time

transaction monitoring that could help reduce fraud rates in Brazil’s market.

Looking toward the future, mobile wallets, new payments types that closely resemble card

payments or even use the card network rails, and mobile payment schemes outside the

networks (such as M-Pesa in Kenya) will be a higher priority. While there are numerous new

payment types, particularly in developing economies, cards and card-like payments will continue

to dominate consumer payments in most geographies for quite some time.



8

Figure 2: Current Total Card Fraud Rates by Country

Source: Aite Group, ACI Worldwide studies of consumers in 20 countries, Q2 2016 and Q1 2014, and in 17 countries, Q3 2012

56%

49%

47%

40%

37%

36%

35%

33%

29%

29%

27%

27%

26%

26%

23%

20%

18%

14%

14%

9%

33%

30%

41%

31%

41%

28%

21%

30%

26%

28%

44%

20%

22%

16%

10%

13%

44%

33%

42%

31%

37%

26%

25%

25%

20%

34%

36%

24%

18%

13%

12%

12%

Mexico

Brazil

United States

Australia

India

Singapore

Canada

South Africa

France

United Kingdom

Dubai (UAE)

Italy

Spain

Indonesia

Thailand

New Zealand

Germany

Sweden

The Netherlands

Hungary

Percentage of Respondents Who Have Experienced Card Fraud in the Last 5 Years, 2012 to 2016

2016 (n=5,861)

2014 (n=5,174)

2012 (n=4,813)



9

Credit card fraud rates in the 2016 study show that consumers around the world still experience

card fraud, despite the implementation of fraud analytics solutions and EMV in many countries.

There is no shortage of ways criminals can take advantage of card data to perpetrate fraud.

The U.S. lags in EMV implementation compared to most of the rest of the world, though there is

some progress.4 So long as there are countries that do not accept chip cards fully, there will still

be cards with magnetic stripes, for travelers if for nothing else. This means skimming and data

breaches will continue to be a challenge, and CNP fraud will continue to be a challenge

irrespective of EMV migrations, barring some unforeseen innovations.

In some countries, there are indicators that not only does CNP fraud increase following EMV

rollout but also application fraud. While application fraud has existed since banks began opening

accounts, it is even easier now due to the breadth of personal information available from

breaches as well as the huge amounts of information published by consumers on sites like

Facebook, LinkedIn, Instagram, and many others. This wealth of data has effectively rendered

knowledge-based authentication (KBA) useless for authentication and makes application fraud

so much easier.

4. See Aite Group’s report EMV: Issuance Trajectory and Impact on Account Takeover and CNP, May

2016.

http://aitegroup.com/report/emv-issuance-trajectory-and-impact-account-takeover-and-cnp



10

Figure 3: Current Credit Card Fraud Rates

Source: Aite Group, ACI Worldwide studies of consumers in 20 countries, Q2 2016 and Q1 2014, and in 17 countries, Q3 2012

The implementation of EMV will also curtail counterfeit fraud on debit cards. Issuers are

generally focused on issuing chip cards to their most active users as well as on regular expiry.

51%

46%

46%

37%

35%

32%

30%

28%

28%

28%

25%

25%

24%

24%

20%

18%

17%

12%

12%

8%

29%

37%

28%

28%

27%

19%

35%

26%

26%

14%

26%

17%

40%

15%

15%

8%

11%

38%

39%

31%

30%

24%

20%

29%

20%

19%

16%

31%

22%

33%

10%

11%

8%

Mexico

United States

Brazil

Australia

Singapore

Canada

India

South Africa

France

Spain

Indonesia

United Kingdom

Italy

Dubai (UAE)

Thailand

New Zealand

Germany

Sweden

The Netherlands

Hungary

Q. Have you experienced fraud on your credit card in the past 5 years?

2016 (n=5,861)

2014 (n=5,174)

2012 (n=4,813)



11

Smaller institutions often need to get in a queue with their card processors to issue chip cards.

Some institutions got in this queue early, but for those toward the back of the queue, it may take

some time, and the institution will have to carry the liability when cards are used at chip-

enabled point-of-sale (POS) terminals.

While some of the countries surveyed have changed, it is clear that Mexico, India, Brazil, and the

U.S. generally have some of the highest card fraud rates. In the 2016 study, cardholders in

Mexico experience the highest rate of debit card fraud at 34%, followed by Brazil (25%), India

(23%), and France (22%). The U.S. closely trails France at 21%. In the 2014 study, cardholders in

China experienced the highest rate of debit card fraud at 30%, followed by India (24%), Mexico

(21%), and the United States (20%; Figure 4). Mexico, Brazil, and France experienced rather

dramatic increases in debit card fraud in 2016 compared to 2014.

It is notable that the countries with higher debit card usage rates relative to credit card usage

rates (e.g., Sweden, the Netherlands, Germany) also have relatively low debit card fraud rates, in

part because of the extensive and effective implementation of EMV, and alternative payment

options (e.g., ELV in Germany, Proton, and other electronic purse options).



12

Figure 4: Current Debit Card Fraud Rates

Source: Aite Group, ACI Worldwide studies of consumers in 20 countries, Q2 2016 and Q1 2014; and in 17 countries, Q3 2012

A rather large number of consumers experienced debit and/or credit card fraud on more than

one occasion in the last five years. Seventeen percent of global consumers experienced debit or

34%

25%

23%

22%

21%

19%

17%

17%

17%

17%

15%

15%

13%

13%

13%

13%

10%

8%

7%

6%

21%

13%

24%

15%

20%

16%

15%

7%

11%

11%

14%

10%

10%

9%

5%

8%

7%

26%

17%

21%

13%

22%

12%

17%

13%

9%

13%

11%

11%

9%

11%

9%

7%

Mexico

Brazil

India

France

United States

South Africa

Spain

United Kingdom

Canada

Australia

Singapore

Dubai (UAE)

Italy

Indonesia

Thailand

Sweden

New Zealand

The Netherlands

Germany

Hungary

Q. Have you experienced fraud on your debit card in the past 5 years?

2016 (n=5,861)

2014 (n=5,174)

2012 (n=4,813)



13

credit card fraud more than once in the past five years, a statistically significant increase from

2014 and 2012 surveys (Figure 5). The wealth of stolen payment details available through data

breaches and phishing scams means everyone is a target and can experience multiple incidences

of fraud with different cards. As criminals try to maximize their take from a single card, fraud can

also occur multiple times for a single card.

Figure 5: Multiple Fraud Incidents

Source: Aite Group, ACI Worldwide study of consumers in 20 countries, Q2 2016

Prepaid cards are relatively new compared to credit and debit but are increasingly being used for

public benefits, payroll, and as an alternative to a traditional checking or current account.

Prepaid card usage and fraud rates vary widely across the countries represented. The highest

rate of fraud on prepaid cards is experienced by consumers in India and Brazil at 18%, followed

by Mexico at 14%, then Italy and Indonesia at 13%. France, Thailand, and Spain are equally close

and within the margin for error. Consumers in many other countries experience low fraud rates

(Figure 6).

It is likely that overall usage rates correlate to these numbers. For example, in India many

government employees are paid via reloadable prepaid cards, and many government benefits

are distributed through government prepaid cards. Another potential factor in the lower fraud

rates is that few prepaid cards are used for a very long time or carry high balances; thus, they are

not only a moving target for fraudsters but also a lower-value one. Consumers may also not

differentiate between open- and closed-loop cards, which have varying levels of value to

criminals.

13% 13%17%

2012 (n=4,813) 2014 (n=4,866) 2016 (n=4,699)

Q. Have you experienced more than 1 incident of debit or credit card fraud in the past 5 years?



14

Figure 6: Current Prepaid Card Fraud Rates

Source: Aite Group, ACI Worldwide study of consumers in 20 countries, Q2 2016 and Q1 2014; and 17 countries in Q3 2012

18%

18%

14%

13%

13%

12%

12%

11%

9%

7%

7%

7%

5%

5%

4%

4%

4%

4%

4%

2%

20%

8%

8%

11%

12%

5%

11%

12%

6%

3%

3%

2%

2%

5%

3%

4%

3%

23%

9%

12%

10%

5%

4%

8%

8%

2%

3%

3%

3%

6%

4%

6%

2%

India

Brazil

Mexico

Italy

Indonesia

France

Thailand

Spain

Dubai (UAE)

Singapore

Australia

United Kingdom

Sweden

Canada

New Zealand

United States

Hungary

Germany

South Africa

The Netherlands

Q. Have you experienced fraud on your prepaid card in the past 5 years?

2016 (n=5,861)

2014 (n=5,174)

2012 (n=4,813)



15

FRAUD IN THE AMERICAS

This section of the report examines consumer behaviors related to financial fraud in the

Americas. There is a lot of variety in the Americas; the U.S. and Canada have quite mature card

payments environments, while markets in countries such as Mexico and Brazil are more nascent.

This is reflected in the fraud rates: The U.S. and Canada have mature controls, but other

geographies, despite leveraging EMV, face high rates of fraud.

RISKY BEHAVIOR

Consumer behavior has some impact on whether someone becomes a victim. In cases such as a

data breach or skimming, the consumer has little control, but consumers can help to prevent

phishing, lost/stolen cards, and friendly fraud. Risky behaviors such as keeping one’s PIN with

the card have a direct correlation to experiencing fraud. It is important to educate customers,

but financial institutions need to avoid causing mental fatigue that will lead to users ignoring

those messages.

There is always a balance between usability and security, and if security becomes too onerous

for the users, they find a way around it (such as writing down PINs or passwords). Too high of a

barrier actually motivates users to engage in risky behaviors. More firms are looking for ways to

improve customer experience and security at the same time. Passive biometrics and more

intelligent monitoring tools are two examples of techniques used to improve security while

avoiding negative user impact. As mobile banking and card payments grow in adoption, there

are new risks with users securing, or failing to secure, their devices.

The survey questioned consumers on whether they had engaged in five different risky behaviors

in the last five years (Figure 7). There are certainly additional risky behaviors, and there will be

new ones as technology evolves.

Consumers in Brazil exhibit the most risky behaviors. Over a quarter (27%) state they leave

smartphones unlocked when not in use, and 23% leave personal information in the trash bin.

Mexico is not far behind in the range of risky behaviors. There is a strong contrast between the

fraud rates and behaviors in the U.S. and Canada compared to Brazil and Mexico; U.S. and

Canadian consumers exhibit more caution that their southern counterparts (Figure 7).



16

Figure 7: Risky Behavior in the Americas


For card fraud to decrease, consumers must play a role, and limiting risky behavior is one way

consumers can help protect themselves. Risky behaviors are generally rising, much of which can

be attributed to the increase in unsafe smartphone usage (Figure 8). Financial institutions can

benefit by further educating customers on best practices to keep them secure. Additional

education can be a valuable customer touchpoint and can support a financial institution’s brand

as a trustworthy partner.

20%

18%

14%

9%

8%

20%

23%

18%

12%

10%

15%

16%

10%

7%

5%

27%

23%

22%

15%

11%

Left smartphone unlockedwhen not using it

Thrown papers ordocuments with account

numbers (e.g., bankstatements) in the trash

bin

Used online banking orinternet shopping withoutsecurity software or on a

public computer

Made a note of your PINand carried it with you or

kept it with your card

Responded to emails orcalls asking for bank

details

Q. Which of the following have you done in the past 5 years?

UnitedStatesMexico

Canada

Brazil



17

Figure 8: Risky Behavior Trends in the Americas

Source: Aite Group, ACI Worldwide study of consumers in 20 countries, Q2 2016 and Q1 2014

It is clear that, in general, consumers who avoid risky behaviors are less likely to experience

fraud (Figure 9). This points to education as a key component to preventing fraud at the user-

behavior level. The more educated consumers are about risky behaviors, the more likely they are

to avoid those behaviors.

33%20% 21% 27%

11%20%

12% 15%

27%

23%30% 23%

13%

18%

12%16%

20%

18%

22% 22%

7%

14%

5%

10%

9%

12%

12% 15%

6%

9%

6%

7%

6%

10%

7%11%

5%

8%

5%

2014(n=307)

2016(n=303)

2014(n=300)

2016(n=300)

2014(n=311)

2016(n=300)

2014(n=304)

2016(n=303)

Mexico Brazil United States Canada

Risky Behavior Trends Over 2014 and 2016

Responded to emails or calls asking for bank details

Made a note of your PIN and carried it with you or kept it with your card

Used online banking or internet shopping without security software or on a public computer

Thrown papers or documents with account numbers (e.g., bank statements) in the trash bin

Left smartphone unlocked when not using it



18

Figure 9: Risky Behavior and Fraud Experienced in the Americas


REPLACEMENT CARDS

Data breaches have become de rigueur, and issuers and merchants can safely assume that

payment card details as well as other information, such as PINs, emails, and addresses, for any

given customer have been breached. As a result of some breaches, some card issuers mail

replacement cards to their cardholders even if there has not yet been fraud on the account,

though many issuers try to limit card reissuance and prefer enhanced monitoring. This reduces

costs for the issuers and inconvenience for consumers.

In the Americas, approximately 53% of Americans received a replacement card during the past

year, along with 46% of Mexicans, 30% of Canadians, and 45% of Brazilians. Given the huge

number of data breaches impacting many retailers, it can be difficult to identify the source of the

data breach and trace the fraud to any given entity (Figure 10). It should be noted that

consumers may not realize exactly why they have received a new card. So there is a possibility

that a card was reissued for fraud or potential fraud that the consumer wasn’t aware of; it is also

possible that cards were reissued in general rotation or for EMV implementation, but the

consumer could have thought it was fraud.

73%

51%

64%

42%

58%

46%

47%

40%

27%

49%

36%

58%

43%

54%

53%

60%

Did not engage inrisky behavior (n=180)

Engaged in risky behavior (n=117)







Canada

Bra

zil

United S

tate

sM

exic

o

Fraud Experienced by Respondents Who Did and Did Not Participate in Risky Behavior in the Americas

Have not experienced card fraud Have experienced card fraud



19

Figure 10: Replacement Cards in the Americas


In Mexico, replacement cards are far more likely to go to back of wallet (get used less often),

with 57% of respondents moving the card backward in the wallet. There is a clear difference in

wallet-position behavior between the U.S. and Canada, which show lower numbers changing

cards, and Mexico and Brazil, which show much higher rates of downgrading a card. This may be

due to greater stickiness associated with customer loyalty programs and multiple product

relationships (Figure 11).

47%

54%

55%

70%

40%

36%

35%

24%

10%

8%

6%

5%

United States(n=293)

Mexico (n=278)

Brazil (n=277)

Canada (n=297)

Q. Has your financial institution sent a new debit, credit, or prepaid card to you during the past year because of a data breach or fraudulent

activity?

No Yes, once Yes, twice Yes, 3 times Yes, more than 3 times



20

Figure 11: Use of Replacement Cards in the Americas


Becoming a victim of fraud can feel just as violating as a home burglary, understandably leaving

consumers emotional, confused, and asking “why did this happen to me?” Considering this

emotional state, financial institutions must focus on customer service to calm customers and

help them through the required post-fraud “aftercare” process. A positive aftercare experience is

a huge customer-retention opportunity and helps rebuild confidence with consumers. This is

especially critical since it is easy for fraud specialists to become rather jaded, and it should be

reinforced as a part of regular training—those agents might have to act as much like counselors

as customer service agents.

In the Americas, consumers in the U.S. are the most pleased with treatment from their

institution after experiencing fraud; 90% of consumers are somewhat happy or very happy with

the treatment they experienced. Second is Canada, where 81% of consumers are at least

somewhat happy with their treatment. There have been some improvements compared to 2014

with consumers in Mexico and Brazil; 80% in Mexico are at least somewhat happy with the

institution, and 65% are the same in Brazil (Figure 12). There is plenty of opportunity to improve,

especially in Latin America, where consumer experience marks are not very strong.

57%

42%

25%

18%

Mexico (n=127) Brazil (n=125) Canada (n=88) United States (n=154)

Percentage of Respondents in the Americas Who Use Their Replacement Card Less as a Result of Fraud or a Breach



21

Figure 12: Satisfaction With Financial Institution After Fraud in the Americas


Consumers who experience fraud and are dissatisfied with the aftercare experience sometimes

change providers. Customer dissatisfaction rates in Mexico and Brazil are relatively high, so it is

not surprising that 23% and 18% of consumers in those respective countries change providers

after a fraud experience. This is an improvement over 2014, when 33% of consumers in Brazil

and 21% of consumers in Mexico were dissatisfied.

In the United States, 6% of consumers switch providers, and in Canada, 11% do so (Figure 13).

This is a shift from 2014, when the U.S. switching rate was 9% and the Canada switching rate was

6%. The rather low U.S. and Canadian consumer switching rates could be due to particularly

sticky relationships with financial institutions. Consumers may have multiple products, such as a

home mortgage, 401(k), or auto loan, with the same institution, and card loyalty programs

incent them to remain with the institution even if they were not particularly happy with the

aftercare experience.

7%

9%

13%

9%

12%

11%

22%

31%

39%

43%

34%

59%

42%

37%

31%


Canada (n=105)

Mexico (n=159)

Brazil (n=137)

Q. How happy were you with the treatment from your financial institution when you experienced card fraud?

Very unhappy Somewhat unhappy Somewhat happy Very happy



22

Figure 13: Switching Behavior in the Americas


Switching institutions has a significant cost for consumers, and some may choose to use a

different card (i.e., front-of-wallet card) or use cash if their trust diminishes after a fraud event

rather than change financial institutions outright. Broadly, in the U.S. and Canada, consumers do

not exhibit a strong preference for using an alternate payment method following a fraud event

(Figure 14). In Brazil and Mexico, over half of consumers report at least some back-of-wallet

behavior.

Figure 14: Back-of-Wallet Behavior in the Americas


77%

82%

89%

94%

23%

18%

11%

6%

Mexico (n=159)

Brazil (n=137)

Canada (n=105)


Q. As a result of your experience with fraud, did you change your financial institution or credit card company?

No, I did not Yes, I did

4%

3%

3%

2%

31%

46%

56%

69%

51%

40%

33%

24%

14%

11%

8%

6%

Mexico (n=159)

Brazil (n=137)

Canada (n=105)


Q. When you experienced fraud, did you choose to use cash or an alternative payment method over a credit or debit card following the

card fraud incident?

Used cash instead ofmy debit card, but notinstead of my credit card

No Yes, but onlyin some situations

Yes, in allsituations



23

CONSUMER AT TITUDES TOWARD FRAUD

Fraud and security have become a mass-market topic—stories of computer hackers, malware,

data breaches, fraud rings, and victims of identity theft are constantly in local and national news

media. It is understandable that consumers might be concerned, especially as institutions don’t

want to share all the countermeasures and controls they are using to avoid providing the

criminals a nice playbook from which to work.

In the Americas, consumers do not have absolute confidence that their financial institutions can

protect them, but the majority believe financial institutions are at least doing the best they can

(Figure 15). Some institutions in the Americas have highlighted security in marketing and

branding materials, and appear to see a positive effect by communicating to customers their

commitment to security.

Figure 15: Consumer Trust in Financial Institutions in the Americas


In the countries where fraud rates are highest, consumers express higher degrees of concern.

This is only logical given that fraud experiences, especially multiple experiences, generally lead

to diminished trust.

The United States is a large target with relatively high rates of fraud, yet consumers express less

concern, since U.S. consumers are protected by federal regulations (such as Regulation E) and

payment network policies that require financial institutions to reimburse them when they are

victimized by electronic fraud. Consumers in Mexico and Brazil, with higher fraud rates and less

regulatory structure, are more concerned about every category of fraud compared to consumers

in the United States and Canada. In Brazil and Mexico, consumers are most concerned about

identity theft and fraud on their debit cards. In the United States and Canada, consumers are

most concerned about identity theft, data breaches that result in compromised account

numbers, and fraud on their credit cards (Figure 16).

4%

8%

8%

13%

12%

67%

69%

60%

55%

24%

21%

26%

30%


Canada (n=297)

Brazil (n=277)

Mexico (n=278)

Q. Do you have confidence in your financial institution to protect you from card fraud?

No, I have verylittle confidencethey can

Not really,they coulddo more

Yes, to an extent,they're doingwhat they can

Yes,absoluteconfidence



24

In general, strong consumer protections in the U.S. and Canada appear to reduce consumers’

concern over fraud events but certainly do not alleviate all concerns. These regulations and

policies also create a moral hazard, since consumers have less of a reason to avoid risky

behaviors.

Figure 16: Consumers’ Fraud Concerns in the Americas


51%

50%

39%

36%

35%

28%

21%

31%

10%

83%

78%

77%

70%

76%

68%

60%

48%

39%

55%

48%

48%

41%

39%

33%

21%

33%

12%

74%

77%

73%

67%

62%

58%

55%

44%

40%

Identity theft

Data breach resulting in compromisedaccount numbers

Fraud on my credit card

Online banking fraud

Fraud on my debit card

Direct debit fraud (auto payment fromaccount)

Cheque/check fraud

Mobile wallets, or electronic purses suchas using PayPal on a phone, or using

Apple Pay, Google Pay, or making in-apppurchases

Fraud on my prepaid card

Percentage of Consumer Who Are Very Concerned About Fraud Types in the Americas

United States(n=300)Mexico (n=303)

Canada (n=303)

Brazil (n=300)



25

FRAUD IN EUROPE, THE MIDDLE EAST, AND AFRICA

Many countries in EMEA have well-developed banking systems. Some have emerging economies,

with consumers gaining new access to many banking products in relatively recent years. Many of

these economies are skipping cards for the most part (mostly used by the wealthy and tourists)

and are leveraging alternative, frequently mobile-based payment options. It is somewhat

difficult to compare financial fraud across such diverse economies, and this report breaks out

eurozone members from the rest of EMEA to better compare the regions.

RISKY BEHAVIOR

Similar to consumers in the Americas, consumers in surveyed EMEA countries are largely

educated to ignore emails and calls requesting details about their bank accounts, although

consumers in the UAE and South Africa respond more frequently (Figure 18). Likewise,

consumers in most countries no longer make a note of their PIN and carry it with their cards;

however, Italian and UAE consumers write down their PINs at 19% and 25%, respectively (Figure

17 and Figure 18). This is a serious flaw in consumer education and a practice that should be

addressed. The UAE has particularly high figures of risky behaviors, which likely contribute to

higher fraud rates.

Figure 17: Risky Behavior in Eurozone


25%

16%

8%

3%

4%

15%

12%

12%

10%

4%

13%

14%

18%

19%

5%

21%

22%

8%

4%

3%

29%

26%

20%

9%

4%




bin


public computer




details


France (n=304)

Germany (n=301)

Italy (n=304)

The Netherlands(n=300)

Spain (n=303)



26

Figure 18: Risky Behavior in EMEA (Non-Eurozone)


Overall, there is still plenty of risky behavior in all geographies, and these behaviors certainly

have some impact on the level of fraud. In every country there are higher incidences of fraud

when consumers participate in risky behavior (Figure 19 and Figure 20). The magnitude of

difference between risky and nonrisky consumers is quite substantial, and changing those

behaviors can have a real impact on fraud. Consumer education and well-timed reminders can

slowly but surely reduce these risky behaviors.

19%

16%

7%

8%

4%

27%

25%

26%

25%

19%

22%

30%

14%

7%

3%

28%

24%

18%

10%

10%

16%

13%

9%

8%

5%




bin


public computer




details


United Kingdom

UAE (n=300)

Sweden (n=302)

South Africa(n=303)



27

Figure 19: Risky Behavior and Fraud Experienced in Eurozone


77%

61%

84%

62%

84%

65%

87%

75%

92%

78%

23%

39%

16%

38%

16%

35%

13%

25%

8%

22%

Did not engage in risky behavior (n=162)

Engaged in riskybehavior (n=127)









Fra

nce

Italy

Sp

ain

Germ

any

The

Neth

erlands

Fraud Experienced by Respondents Who Did and Did Not Participate in Risky Behavior in the EMEA




28

Figure 20: Risky Behavior and Fraud Experienced in EMEA (Non-Eurozone)


REPLACEMENT CARDS

Across all the EMEA countries surveyed, the rate at which consumers received a replacement

card due to fraud or data breaches during the past year ranges from 10% in Hungary (where

fraud is low) to 29% in the UAE (one of the countries with the highest fraud rates in the study). A

small but substantial number of consumers received more than one replacement card during the

past year (Figure 21 and Figure 22).

71%

64%

73%

67%

86%

69%

90%

82%

92%

88%

29%

36%

27%

33%

14%

31%

10%

18%

8%

12%











So

uth

Afr

ica

United

Kin

gd

om

UA

ES

weden

Hungary

Fraud Experienced by Respondents Who Did and Did Not Participate in Risky Behavior in the EMEA




29

Figure 21: Replacement Cards in Eurozone


Figure 22: Replacement Cards in EMEA (Non-Eurozone)


Replacement cards are not a bad thing in and of themselves. Some consumers appreciate a

proactive approach following a data breach or identified skimming incident. Others may find this

annoying if they need to update recurring billing information. It is very critical that institutions

provide very clear information in cases of breach or skimming events. Many issuers are opting to

more closely monitor accounts that may be involved in a breach or skimming event rather than

reissue cards. This can reduce costs for issuers and reduce inconvenience for consumers.

76%

78%

78%

83%

88%

21%

18%

19%

15%

9%

Spain (n=290)

France (n=289)

Germany (n=296)

Italy (n=294)



activity?

No Yes, once Yes, twice Yes, 3 times

71%

78%

81%

87%

90%

22%

20%

15%

11%

8%

5%UAE (n=279)

United Kingdom(n=295)

South Africa(n=295)

Sweden (n=296)

Hungary (n=284)


activity?

No Yes, once Yes, twice Yes, 3 times



30

Across the EMEA countries, consumers use replacement cards less than the cards they replaced

at rates ranging from 25% in Germany to 51% in the UAE. These high rates of back-of-wallet

behavior reduce card issuers’ revenue and demonstrate diminishing trust in the cards or

financial institutions involved (Figure 23).

Figure 23: Use of Replacement Cards in EMEA


After experiencing fraud, at least 50% of consumers were at least somewhat happy across all

eight countries surveyed. France and the U.K. saw some of the most satisfied consumers, with

80% at least somewhat satisfied in both countries. Others, such as Spain, Italy, Hungary, South

Africa, and the UAE, had significant populations that were at least somewhat unhappy (Figure 24

and Figure 25).

51%47%

44% 43% 41%

35% 33% 33% 32%

25%

UAE (n=81) Italy (n=49) Spain(n=71)

TheNetherlands

(n=35)

SouthAfrica(n=56)

France(n=63)

UnitedKingdom(n=66)

Sweden(n=39)

Hungary(n=28)

Germany(n=64)

Percentage of Respondents in the EMEA Who Use Their Replacement Card Less as a Result of Fraud or a Breach



31

Figure 24: Satisfaction With Financial Institution After Fraud in Eurozone


Figure 25: Satisfaction With Financial Institution After Fraud in EMEA (Non-Eurozone)


Even though so many consumers are at least somewhat unhappy with their treatment

subsequent to experiencing fraud, relatively few consumers report that they switched financial

institutions. The UAE is a standout with a 30% switching rate (Figure 26). While these rates may

seem relatively low, financial institutions are competing for customers, and it is more expensive

to acquire a customer than it is to keep one; retaining customers results in both retaining

revenue and decreasing costs. Hungary’s relatively low satisfaction rates do not translate to

higher switching numbers. It is not clear what reasons contribute to this high degree of loyalty.

7%

17%

3%

13%

13%

17%

8%

17%

20%

19%

27%

36%

41%

35%

47%

49%

40%

39%

32%

22%


Germany (n=53)

France (n=88)

Spain (n=79)

Italy (n=79)



9%

5%

11%

14%

9%

10%

19%

22%

16%

25%

21%

19%

19%

24%

50%

59%

57%

48%

45%

16%


Sweden (n=42)

Hungary (n=27)

South Africa(n=98)

UAE (n=76)





32

Figure 26: Switching Behavior in EMEA


Not all unhappy consumers switch financial institutions after experiencing fraud, but they can

still negatively impact their financial institution’s revenue by using their card less often. It can

become a “let’s just be friends” type of relationship. In many cases, there is a change in wallet

position only in certain situations (Figure 27 and Figure 28). While not included in the survey

questions, anecdotal evidence suggests consumers will often choose an alternative card for

online purchases and a separate one for POS ones. This quite rightly is presented to consumers

as a best practice to segment for different types of risk in stores compared to online.

70%

82%

82%

83%

83%

84%

87%

90%

90%

93%

30%

18%

18%

17%

17%

16%

13%

10%

10%

7%

UAE (n=76)

Italy (n=79)

Spain (n=79)


Sweden (n=42)

South Africa(n=98)

Germany (n=53)

France (n=88)


Hungary (n=27)





33

Figure 27: Back-of-Wallet Behavior in Eurozone


Figure 28: Back-of-Wallet Behavior in EMEA (Non-Eurozone)



Less than one-third of consumers across EMEA have absolute confidence that their financial

institution can protect them from fraud, though in all countries at least 60% believe the

institutions are doing what they can to protect them. Sweden, South Africa, and the Netherlands

have some of the lowest rates of confidence (Figure 29 and Figure 30).

3%

4%

2%

41%

46%

49%

54%

65%

46%

49%

32%

32%

33%

11%

5%

15%

12%

2%

Italy (n=79)

Spain (n=79)

Germany (n=53)


France (n=88)

Q. When you experienced fraud, did you choose to use cash or an alternative payment method over a credit or debit card following the card

fraud incident?

Used cash insteadof my debit card,but not insteadof my credit card



3%

2%

4%

4%

5%

21%

38%

48%

55%

64%

58%

45%

48%

32%

24%

18%

14%

9%

7%

UAE (n=76)

Sweden (n=42)

Hungary (n=27)

South Africa(n=98)



fraud incident?






34

Figure 29: Consumers’ Trust in Financial Institutions in Eurozone


Figure 30: Consumers’ Trust in Financial Institutions in EMEA (Non-Eurozone)


Consumers are understandably concerned about a wide range of financial fraud types. The

majority of consumers are very concerned about identity theft, data breaches resulting in

compromised account numbers, online banking fraud, and fraud on credit and debit cards. Many

consumers in EMEA are not very concerned with check fraud, as checks are generally utilized less

than in North America and some other countries. There is certainly a fair bit of concern about

the mobile channel; as more options become available and more consumers use mobile

payments, these numbers are likely to rise (Figure 31 and Figure 32).

6%

11%

10%

15%

16%

19%

65%

59%

66%

53%

68%

21%

25%

17%

28%

11%

Germany (n=296)

Spain (n=290)

France (n=289)

Italy (n=294)







5%

2%

3%

4%

9%

5%

9%

10%

12%

16%

51%

69%

54%

58%

59%

39%

20%

33%

27%

16%

Hungary (n=294)


UAE (n=279)

South Africa(n=295)

Sweden (n=296)








35

Figure 31: Consumers’ Fraud Concerns in Eurozone


67%

63%

53%

63%

56%

47%

35%

35%

22%

35%

35%

35%

29%

19%

25%

31%

24%

14%

55%

54%

44%

48%

40%

45%

25%

36%

35%

24%

26%

23%

14%

16%

17%

6%

18%

9%

75%

70%

65%

65%

65%

60%

47%

29%

34%

Identity theft






Cheque/check fraud

Mobile wallets, or electronic pursessuch as using PayPal on a phone, or

using Apple Pay, Google Pay, ormaking in-app purchases


Percentage of Consumers Who Are Very Concerned About Fraud Types in EMEA

France (n=304)

Germany (n=301)

Italy (n=304)


Spain (n=303)



36

Figure 32: Consumers’ Fraud Concerns in EMEA (Non-Eurozone)


43%

42%

39%

38%

33%

34%

25%

16%

11%

31%

26%

21%

24%

23%

16%

12%

5%

13%

70%

66%

65%

59%

59%

64%

40%

39%

26%

80%

76%

68%

62%

81%

60%

70%

42%

56%

60%

62%

62%

62%

57%

55%

49%

48%

46%

Identity theft






Mobile wallets, or electronic pursessuch as using PayPal on a phone, or

using Apple Pay, Google Pay, ormaking in-app purchases

Cheque/check fraud


Percentage of Consumers Who Are Very Concerned About Fraud Types in EMEA

United Kingdom(n=300)Sweden (n=302)

South Africa (n=303)

Hungary (n=303)



37

FRAUD IN THE ASIA-PACIFIC

The final region covered by the consumer fraud study is the Asia-Pacific, with six countries

included in 2016. Consumer behavior and attitudes in this region are somewhat different than in

EMEA and the Americas.

RISKY BEHAVIOR

Consumer behavior in Australia and New Zealand tends to be far less risky than in the rest of the

Asia-Pacific. This may be attributable to relatively more mature card payments markets and

fraud controls. The faster-growing and maturing markets, such as Thailand, Indonesia, and India,

tend to show greater levels of risky behavior.

The very low percentages of Australian and New Zealand consumers who carry their PIN with a

card or respond to emails and calls asking for bank account information more closely resemble

consumers in the Americas and EMEA than in other Asia-Pacific countries. Large percentages of

consumers in all countries leave smartphones unlocked when not in use and throw documents

with bank account numbers in the bin.

The pattern tends to hold that fast-growing Thailand, India, and Indonesia exhibit some of the

highest-risk behaviors. Much of this might be attributed to less consumer education and

experience with payment cards. In all countries except Australia and New Zealand, over 20% of

consumers bank or shop online on computers without security software or on public computers

(Figure 33). In a number of countries—again, those growing quickly—consumers generally do

not have strong broadband connections at home, and many consumers rely on internet cafes

when actives cannot be completed on a mobile device. For example, internet cafes are very

popular in Thailand among locals and tourists, and some neighborhoods seem to have one on

every corner.



38

Figure 33: Risky Behavior in the Asia-Pacific


The Asia-Pacific does not show clear trends for growth or decline in risky behaviors. It is clear

that more mature markets, such as New Zealand and Australia, demonstrate lower incidence of

risky behavior. 2016 rates are relatively similar to 2014 ones, however. This implies an

opportunity for consumer education specifically focused on how customers’ behavior affects the

potential for fraud (Figure 34).

23%

15%

11%

5%

7%

35%

24%

19%

10%

12%

22%

34%

30%

20%

19%

34%

31%

29%

19%

21%

28%

26%

10%

3%

4%

30%

36%

43%

25%

19%


numbers (e.g., bankstatements) in the trash bin



public computer


details




Australia (n=300)

Singapore (n=303)

India (n=300)

Indonesia (n=300)

New Zealand (n=301)

Thailand (n=300)



39

Figure 34: Risky Behavior Trends in the Asia-Pacific


In every country of the Asia-Pacific region, risky behavior and experiencing fraud clearly

correlate. This is most clear in India, Thailand, and Indonesia. Again, educating consumers about

risky behaviors and the need to avoid them as well as alternative behaviors (such as Linux

installations that can run off a USB key) can help reduce fraud incidents and help consumers feel

some element of confidence in their ability to protect themselves from fraud (Figure 35).

25% 19% 15% 21% 14% 12% 4% 4% 6% 7%19%

28%22% 37%

34%37% 35%

32% 28% 23% 23%

30%

31%

30%27% 29%

24%19%

13%10% 8% 11%

43%

22%

20%16%

19%

14%

10%

5%

25%

29%

34% 28%31%

32%

24%

20%26%

21% 15%

36%

2014(n=310)

2016(n=300)

2014(n=330)

2016(n=300)

2014(n=311)

2016(n=303)

2014(n=310)

2016(n=301)

2014(n=310)

2016(n=300)

2016(n=300)

India Indonesia Singapore New Zealand Australia Thailand

Risky Behavior Trends Over 2014 and 2016

Left smartphone unlocked when not using it

Responded to emails or calls asking for bank details

Used online banking or internet shopping without security software or on a public computer

Thrown papers or documents with account numbers (e.g., bank statements) in the trash bin

Made a note of your PIN and carried it with you or kept it with your card



40

Figure 35: Risky Behavior and Fraud Experienced in the Asia-Pacific


REPLACEMENT CARDS

In the Asia-Pacific region, consumers who received at least one replacement card range from a

low of 14% in Thailand to almost 34% in Singapore. This may be a reflection of targeted fraud

attacks and data breaches pointed to more affluent regions such as Singapore, India, Australia,

and New Zealand. As in other regions, some consumers received multiple replacement cards

during the past year (Figure 36).

64%

54%

65%

62%

82%

55%

89%

69%

85%

75%

91%

73%

36%

46%

35%

38%

18%

45%

11%

31%

15%

25%

9%

27%

Did not engage in riskybehavior (n=170)









Engaged in riskybehavior(n=153)



Au

str

alia

Sin

ga

pore

India

Indonesia

New

Ze

ala

nd

Th

aila

nd

Fraud Experienced by Respondents Who Did and Did Not Participate in Risky Behavior in the Asia-Pacific




41

Figure 36: Replacement Cards in the Asia-Pacific


Many consumers across the Asia-Pacific region used replacement cards less than the original

cards. This back-of-wallet behavior occurred at very high rates compared to other regions—from

31% in Australia to 74% in Thailand. This behavior represents lost revenue for financial

institutions and surely shows consumers’ lack of confidence as well as an increasing variety of

noncard-based payment options available to consumers (Figure 37).

Figure 37: Use of Replacement Cards in the Asia-Pacific


86%

85%

79%

72%

69%

66%

13%

14%

17%

21%

24%

26%

6%

4%

7%

Thailand (n=264)

New Zealand(n=295)

Indonesia (n=268)

Australia (n=295)

India (n=282)

Singapore (n=291)


activity?

No Yes, once Yes, twice Yes, 3 times Yes, more than 3 times

74%

62%58%

36% 36%31%

Thailand (n=38) India (n=87) Indonesia(n=55)

Singapore(n=98)

New Zealand(n=45)

Australia (n=84)

Percentage of Respondents in the Asia-Pacific Who Use Their Replacement Card Less as a Result of Fraud or a Breach



42

Consumer satisfaction rates with financial institutions’ aftercare experience vary dramatically by

country. In Australia, 85% of consumers were at least somewhat happy after a fraud experience,

and in New Zealand, 77% were at least somewhat happy. In the other countries, high

percentages of consumers were unhappy after their fraud experience: 40% were at least

somewhat unhappy in Singapore (increased from 33% in 2014), 48% in India, and 42% in

Indonesia (Figure 38). In many cases, customer aftercare is still evolving, as is the sophistication

of card fraud monitoring in the growing economies. This is again clear compared to the more

mature markets in Australia and New Zealand.

Figure 38: Satisfaction With Financial Institution After Fraud in the Asia-Pacific


Compared to other regions, the Asia-Pacific’s switching rates are rather high. In Thailand, India,

and Indonesia, between 44% and 48% of consumers switch financial institutions after their fraud

experience. These very high rates of customer attrition are very costly to financial institutions. In

Singapore, 21% of consumers switch financial institutions after experiencing fraud, much greater

than in Australia and New Zealand. This is troubling, as Singapore is a wealthy country with well-

established global banks, regulations, and technology tools.

Australia and New Zealand have the lowest rates of switching behavior, at 13% and 8%,

respectively, which is much more similar to North America and Western Europe than other parts

of the Asia-Pacific (Figure 39). Much like in the Americas, there may be more stickiness with

consumers in Australia and New Zealand due to more in-depth relationships via multiple

products, whereas consumers in the growing economies may have more willingness to switch

and are less closely tied to a given institution. There is an opportunity in Thailand, India, and

Indonesia to create stickier multiproduct relationships and loyalty programs.

17%

20%

18%

13%

11%

10%

7%

28%

24%

27%

26%

33%

37%

36%

44%

48%

55%

52%

40%

16%

14%

12%

8%

Australia (n=119)

New Zealand(n=60)

India (n=106)

Indonesia (n=71)

Singapore (n=107)

Thailand (n=62)





43

Figure 39: Switching Behavior in the Asia-Pacific


Somewhat surprisingly, countries with higher fraud rates and lower levels of customer aftercare

do not show particularly high rates of moving cards to back of wallet. Indonesia, Thailand, and

India show large proportions of consumers who only change wallet position behavior in some

situations (Figure 40).

Figure 40: Back-of-Wallet Behavior in the Asia-Pacific


52%

52%

56%

79%

87%

92%

48%

48%

44%

21%

13%

8%

Thailand (n=62)

India (n=106)

Indonesia (n=71)

Singapore (n=107)

Australia (n=119)

New Zealand(n=60)



4%

10%

2%

3%

3%

14%

18%

13%

49%

54%

68%

69%

58%

56%

38%

31%

23%

13%

23%

21%

11%

12%

5%

Indonesia (n=71)

India (n=106)

Thailand (n=62)

Singapore (n=107)

Australia (n=119)

New Zealand(n=60)


fraud incident?






44


Much like other regions, the Asia-Pacific enjoys a strong consumer sentiment that financial

institutions are at least doing the best they can to prevent fraud (Figure 41). Singapore and

Thailand have the lowest levels of confidence, with each showing a 15% unfavorable view. As in

other geographies, marketing and demonstrating to customers the controls and technologies

that are in place can improve customer satisfaction.

Figure 41: Consumers’ Trust in Financial Institutions in the Asia-Pacific


Across all countries, consumers in the Asia-Pacific are most concerned about identity theft, data

breaches resulting in compromised account numbers, and online banking fraud (Figure 42).

Singapore stands out as most concerned in nearly every category, which reflects these

consumers’ relatively low confidence that institutions are protecting them compared to the

confidence of consumers in other countries. Check fraud is much more of a concern in India,

Singapore, and Indonesia than in most of EMEA, as checks are more commonly used in the Asia-

Pacific compared to most of EMEA.

3%

6%

7%

7%

9%

13%

13%

49%

70%

64%

59%

60%

71%

45%

22%

27%

29%

25%

14%

India (n=282)

New Zealand(n=295)

Australia (n=295)

Indonesia (n=268)

Thailand (n=264)

Singapore (n=291)








45

Figure 42: Consumers’ Fraud Concerns in the Asia-Pacific


50%

47%

43%

37%

33%

30%

30%

15%

16%

72%

69%

71%

68%

58%

62%

58%

40%

35%

62%

65%

66%

58%

64%

62%

46%

56%

47%

75%

73%

65%

65%

65%

61%

45%

49%

54%

38%

35%

34%

32%

24%

26%

31%

13%

13%

53%

38%

47%

45%

44%

37%

34%

27%

28%


Identity theft





Mobile wallets, or electronic purses such asusing PayPal on a phone, or using Apple

Pay, Google Pay, or making in-apppurchases

Cheque/check fraud


Percentage of Consumer Who Are Very Concerned About Fraud Types in the Asia-Pacific

Australia (n=295)

Singapore (n=291)

India (n=282)

Indonesia (n=268)

New Zealand(n=295)



46

RECOMMENDATIONS

When consumers are not engaged in the fraud-prevention process and unaware of how their

behaviors put them at risk, financial institutions and consumers suffer. There is great mutual

benefit in creating a partnership with consumers by providing education to reduce the risk of

fraud in the first place, then having strong aftercare processes when a fraud does occur. Doing so

can both reduce costs and preserve revenue.

At the same time, in the case of data breaches or skimming, there is little if anything the

institution or consumer can do. Helping consumers understand that these events are not always

the institution’s fault and communicating clearly what actions are being taken can go a long way

toward improving consumer confidence.

For financial institutions:

Customer education and participation: This can come in many forms, such as on the

website or mobile app, as a part of email notifications, community “shred it” days,

and through the aftercare process. Ensure they have a basic understanding of how

the institution is keeping them safe, too.

Offer example cases: Many consumers do realize some of their behaviors are risky

and don’t necessarily know what alternatives are available to them. One approach is

to create a short story explaining the risky behavior, the potential for fraud, and

alternative actions. This can bring the message home to consumers. For example,

consumers who need to use internet cafes or other insecure connections can be

instructed on how to use a USB-based Linux instance to run more secure sessions.

Another example is helping users create a mnemonic to help remember PINs and

passwords.

Communicate clearly and simply: Ensure consumers understand the reason for a

replacement card, that it is safe to use, and why it is safe to use. Make fraud

protection efforts easy to understand and easily available, without exposing too

much information to fraudsters. Explain clearly why the card was reissued—because

of fraud, to replace stripe with chip, or as part of the general expiry cycle.

Focus on customer experience: After experiencing fraud, consumers are often

emotional. Train agents to be empathetic and helpful to the greatest extent possible

to retain victimized customers. Remind agents that while they work on fraud cases

every day, the customer on the other end doesn’t have that experience.

Focus on layers of security: There is no “silver bullet” solution, but consider how

tools like 3-D Secure, transaction monitoring, and biometric authentication could

enhance both security and customer service.



47

RELATED AITE GROUP RESEARCH

Combating Fraud: Consumer Preferences, January 2016.

Not Your Father’s 3-D Secure: Addressing the Rising Tide of CNP Fraud, February 2016.

EMV: Issuance Trajectory and Impact on Account Takeover and CNP, May 2016.

Digital-Channel Fraud Mitigation: The Mobile Force Awakens, June 2015.

Payment Cards: Current Threats and Protections, September 2014.

http://aitegroup.com/report/combating-fraud-consumer-preferences

http://aitegroup.com/report/not-your-father’s-3-d-secure-addressing-rising-tide-cnp-fraud

http://aitegroup.com/report/emv-issuance-trajectory-and-impact-account-takeover-and-cnp

http://aitegroup.com/report/digital-channel-fraud-mitigation-mobile-force-awakens

http://aitegroup.com/report/payment-cards-current-threats-and-protections



48

ABOUT AITE GROUP

Aite Group is a global research and advisory firm delivering comprehensive, actionable advice on

business, technology, and regulatory issues and their impact on the financial services industry.

With expertise in banking, payments, insurance, wealth management, and the capital markets,

we guide financial institutions, technology providers, and consulting firms worldwide. We

partner with our clients, revealing their blind spots and delivering insights to make their

businesses smarter and stronger. Visit us on the web and connect with us on Twitter and

LinkedIn.

AUTHOR INFORMATION

Ben Knieff

+1.617.398.5096

[email protected]

CONTACT

For more information on research and consulting services, please contact:

Aite Group Sales +1.617.338.6050

[email protected]

For all press and conference inquiries, please contact:

Aite Group PR

+1.617.398.5048

[email protected]

For all other inquiries, please contact:

[email protected]

http://aitegroup.com/

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mailto:[email protected]




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