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Often when we talk about card fraud we lump together credit and debit cards. But while this is convenient, it’s maybe not always telling the full story.

The reason is that there are subtle variations between the two, in terms of how they’re used, the transaction limits and so on. In other words, a debit card and a credit card represent two very different propositions for the fraudster.

Latest figures from the Federal Reserve in the US suggest something that perhaps we should already know – PIN debit cards suffer less fraud than signature credit cards.

“Among general-purpose cards, single-message (or PIN) debit card transactions (including both purchases and ATM cash withdrawals) in 2012 had the lowest fraud rates by both number and value,” the US central bank states.

In the US, PIN debit cards saw a fraud rate of 0.89 transactions per 10,000. That was a lot lower than the 3.92 figure reported for credit cards requiring a signature. Hardly surprising, but then the credit card figure was also significantly higher than that of signature debit (3.07 per 10,000 transactions).

So why would this be? Obviously fraudulent PIN transactions are going to be a lot harder to carry out than something needing a signature at the point of sale. But why the variation between the two signature types?

What it could suggest is that the way we use our signature debit cards varies considerably from the way we use our signature credit cards and that this is having an impact on fraud. People tend to use their debit card at the ATM, but seldom would they insert their credit card into one.

Card skimming ought to mean that signature debit cards (non-EMV) are more prone than credit cards in as much as there is an added potential point of compromise. Yet clearly this is not the case.

Instead we have to look to the relative value of each fraud – the amount that fraudsters are stealing each time. Here we can see how the economics of card fraud – it is a business like any other – matters.

Credit cards often have limits of thousands of dollars, but how many of us have this much in our current account? A criminal can steal a lot more money in one transaction from a credit card than a debit card. There is also the possibility that credit card firms require a higher value to flag a suspect transaction than debit card providers because again the way these are used varies (people tend to spend higher value amounts on their credit cards, although even this is changing to a degree).

Clearly credit cards are a more attractive proposition to the fraudsters and this means they are devoting more attention to this sector. Card issuers need to ensure they adjust their fraud detection strategies to keep up.


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Compelling voices and contributed content from around the web

Andy Brown

Andy is marketing director for payments at NCR. He has nearly 30 years' experience in e-payment systems from the delivery and support of systems in the Far East and Europe, from both the product management and marketing perspectives. Based in the UK, Andy is responsible for marketing NCR payment solutions.

Dena Hamilton

Dena is NCR's Director of Enterprise Fraud & Security Software Solutions. She specializes in fraud, risk, compliance and security, with over 35 years of experience in the financial services space. Her focus is the development and deployment of enterprise financial crime solutions optimized in prevention, detection and back office efficiency.

James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Neill Harris

Neill Harris is product marketing director for ATM solutions at NCR. He travels extensively to many of the world's leading banks and financial institutions, articulating how self-service technology and innovation can inform and support strategies and solve challenges.

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Brad Strothkamp

Cleopatra Mavredis

Cleopatra is NCR’s Global Marketing Manager for Channel Solutions and has more than 20 years of experience in the ATM industry. NCR’s channel solution portfolio is comprised of APTRA Vision, Inetco Insight and OptiSuite solutions.

Edward Wade

Edward is a freelance writer from Sheffield. Now living in London, he focuses on business and finance.