CARD-NOT-PRESENT FRAUD – CHALLENGES AND COUNTERACTIONS

Abstract

Due to the rapid development of electronic commerce, the percentage of card-not-present payments over the Internet and fraud related to these, have increased. The relative importance of card-not-present fraud (CNPF) has increased permanently on a global and European scale mainly due to the gradual solution to problems connected with the protection of cardpresent transactions through the transition to the EMV chip standard and transfer of fraud to more vulnerable card-not-present transactions in which it is difficult to verify the identity of the cardholder in a reliable way. For the protection of card transactions it is necessary to take adequate measures by introducing common harmonized compulsory minimum security requirements across the EU. First, we propose these equirements to include methods for checking the authentication of users. We consider the 3-D Secure Protocol in a version with dynamic authentication the most suitable method because in the EU many steps towards its implementation have already been made. This is of great importance for the systems used by banks and merchants for the prevention of card-not-present fraud and for detecting and blocking of fraudulent transactions.