Banks must brace for the spread of debit card fraud

Plans for the creation of the Single Euro Payments Area (SEPA), in which all electronic payments will be considered domestic, with no difference between national and international payments, will be launched early next year. Banks are concerned that the development will increase the risk of fraud with plastic money, especially as the use of debit cards is projected to spread on a par with credit cards by the end of the decade. Jackie Barwell is head of the department against fraud involving credit and debit cards at First Data, which aspires to provide a European database for dealing with the phenomenon. She spoke to Kathimerini on the measures banks plan to adopt to stem fraud. What are the measures banks plan to adopt in view of SEPA? As a first step, the European Payments Council (EPC), has agreed to apply the EMV technology. Already, 52 percent of payment cards, 60 percent of ATMs and 50 percent of point-of-sale (POS) terminals operate on EMV technology. According to our estimates, cross-border fraud in SEPA will be cut to under the present national levels. However, EMV is but a single line of defense, as all sides have agreed on the creation of a pan-European database. Do you believe that the risk of fraud spreading through the use of debit cards will be greater than that of credit cards, and how will it be dealt with? I would not say it is a more substantial risk but that it is of a different type. The problem for banks, as with credit cards, is to understand the behavior of those perpetrating fraud, and lay out a strategy for dealing with it. This is because those that sell plastic card numbers value each type of card differently. They know, for instance, that corporate credit cards usually carry large balances. Correspondingly, through debit card fraud, someone can gain access to large sums of money. With debit cards, the risk obviously is that they gain access to the bank account of the card holder, and the risk is bound to spread in proportion to their use. What are the most serious obstacles to the adoption of common rules among banks for dealing with card fraud? It is difficult to scale obstacles but we could say that one of the most important ones is the difficulty that credit institutions have in exchanging information. This is a particularly sensitive area, as it involves personal data and it touches upon issues of competition. In any case, however, banks must put aside such reservations and focus their efforts on making life difficult for those engaging in fraud through plastic money. I believe that consumers will view in a positive light any attempt aimed at enhancing their protection and building a relationship of trust with the banking system. How much of a problem is the funding of such a broad policy? This is undoubtedly one of the obstacles. Nevertheless, cost estimates must be made on the basis of what we lose from the spread of fraud. Estimates must also account for the cost of the loss of reputation. But there is also an ethical problem – how right is it for a bank which, by refusing to cooperate through sharing the methods it uses, is essentially pushing those engaged in fraud to the bank next door.