Card fraud rises with increased online shopping, says report

Online shopping jumped 65% in 2020, but Australians also lost $418.9 million to card not present (CNP) cybercrime during the period.

The Australian Payment Network’s 2021 Fraud Report revealed some fascinating insights into the impact of the pandemic on Australian spending habits, as well as credit card fraud statistics.

According to the Reserve Bank of Australia (RBA), before COVID-19, Aussie shoppers were beginning to prefer online shopping, and the pandemic then reinforced this customer preference for e-commerce and digital payments.

Restrictions and lockdowns accelerated this preexisting shift towards digital channels. And, as shopping moves online, so do payments - with digital transaction fraud not far behind.

In 2020, spending on Australian debit and credit cards dropped for the first time to a total of $801.7 billion – down 2.2% from the previous year. Contrasting this drop, data from the Australian Bureau of Statistics (ABS) shows that from the start of COVID in March 2020 to January 2021, total online sales averaged an annual increase of 65%.

Although the statistics on overall card fraud remained fairly stable in 2020 - up 0.6% to $467.6 million - fraud involving card-not-present (CNP) payment, which is primarily online, saw a notable jump of 3.8% to $418.9 million.

The pandemic restrictions brought a sharp decrease in in-person shopping, so online shopping continued to accelerate and, with that, came an increase in CNP fraud:

• Fraud on Australian cards increased by 0.6% to $467.6 million from 2019.

• Online card fraud now accounts for 90% of all Australian card fraud – up from 87% in 2019.

• During this period, the average value of fraud transactions was $116.

• Fraud accounted for 0.058% of the $801.6 billion total card spend - up 0.001% from 2019.

Over the same period, physical card-present (CP) fraud fell:

• Counterfeit/skimming fraud dropped by 34.1% to $11.1 million, reaching a record low.

• Lost and stolen card fraud dropped by 24.9% to $26.3 million, the lowest total since 2012.

Luckily, when using your physical card, the chip technology in credit and debit cards provides strong protection against counterfeiting and skimming. Similarly, contactless tap and go payments through your phone or other devices give you added security.

That said, the Australian Payment Network recommends that in order to reduce your risk of online payment fraud you should use your financial institution’s fraud solutions whenever prompted, such as push notifications on your phone each time a transaction is made on your account.

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