To better combat fraud, financial institutions need a holistic approach – Nets

Financial institutions need a holistic approach to fraud prevention or are in danger of losses spiralling out of control, a new report for payments company Nets claims.

The European Fraud Report – Payment Industry Challenges is compiled of responses from retailers and payments industry players around card fraud in Europe.

Annually, in Europe the value of fraudulent transactions amounts to €1.8bn and a dramatic increase in card not present fraud (CNP) fraud, has meant firms need to improve prevention.

One of its findings is that as the payment fraud world changes, with data breaches, social media, and consumer demands, firms need to have holistic view. It claims that the only way to effectively combat fraud is by combining all the data from issuers, acquirers, and processors.

Nets suggests that if banks and payment service providers want to keep up with fraud and risk challenges, they have two options. The first is to benefit from next generation fraud and risk prevention services managed by a trusted external partner, which can cover new trends and help the firm keep control of its data.

The other option is to combine existing in-house fraud and management with white-label next generation support to close gaps in their in-house services.

Its report explores the complexities fraud prevention reams face within financial institutions, including the mass adoption of e-commerce, cross-border trade, new legislation, and the popularity of new digital payment methods. Furthermore, it explores the impact of organised criminal enterprise’ use of pre-packaged scams (fraud as a service) and the best way to tackle this.

Nets head of digital fraud, intelligence and research Sune Gabelgård said, “Although initiatives such as EMV implementation and 3D-Secure have done much to reduce losses from lost and stolen cards in Europe, the payments industry still faces challenges.

“Many issuing banks have focused on fraud prevention through consumer education, by increasing awareness of the risks of phishing and other scams. When presented with all relevant data, however, it is clear that the industry must focus on tackling the problem of fraud where it starts on the internet, as this is one of the biggest challenges today and rarely has anything to do with the customer.”