Payment providers are under pressure to ensure that customer demands for convenience don’t come at the expense of higher fraud and cybercrime.

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Payment providers have long had to balance the trade-off between meeting mandated security requirements and providing convenience and the latest technology for consumers.

Over the past five to 10 years, this pressure has become more intense, as the demand for a wider variety of fast and convenient payment options. This, however, sometimes comes at the expense of security with criminals taking advantage of the situation.

Fraud and Scams in Australia

Australians lost a record $323 million to scams in 2021. Money lost to scams almost doubled in one year, with more than 286,000 Aussies reporting they were scammed last year.

These figures represent a ‘significant’ increase of 84% compared to 2020, when Aussies lost $175.6 million through the year.

Investment scams did the most damage according to the latest figures from the Australian Competition and Consumer Commission’s (ACCC) Scamwatch.

Investment scams accounted for $177 million, followed by dating and romance scams which saw people losing $52 million.

December saw the most money lost ($43.2 million) and August 2021 saw the highest number of scams reported (40,874).

New South Wales residents were collectively duped of $110 million – the highest, followed by Victoria where residents reported $74 million lost.

Crispin Kerr, Australia-New Zealand vice president at cybersecurity company Proofpoint, said the data paints an unfortunate picture of just how effective scammers were at taking advantage of Australians in the past year.

“The 84% increase in losses to scams in 2021 is significant and is just the tip of the iceberg when it comes to understanding the true impact on Australians,” Mr Kerr said.

“Based on the numbers for December, during the holiday season, people can become desensitised to receiving numerous advertising links for shopping deals and the like and may not think twice about opening a dangerous file or clicking a suspicious link.

“The data shows scammers were extremely active in 2021 and we anticipate this will only increase as scammers continue to evolve and update their tactics.”

How are Aussies getting scammed?

While investment and romance scams were the most damaging, there were a number of other scams that saw Aussies losing millions.

Investment scams accounted for more than half of all the money lost to scams last year, and increased in prevalence by 32% compared to 2020.

“Investment scams can seem very attractive, and scammers can come across as legitimate in their promise of financial gain through the purchase of shares, funds, cryptocurrency or other high returns,” Mr Kerr said.

“However, the reality is that these get-rich-quick schemes enable scammers to steal personal and financial information to siphon funds for their own gain.”

Social media sites were the main hub for money loss via romance and dating scams, with 40% of scams reported resulting in money lost.

“Scammers also utilised social engineering particularly during lockdowns when people were at their most vulnerable to steal millions from Australians in dating and romance scams,” Mr Kerr said.

Phishing scams – where scammers aim to gain personal information – had the highest number of reports in 2021, making up one quarter of all scams reported. This is an increase of 61% on the year prior.

Scams relating to threats to life or arrest disproportionately affected younger Australians aged 18 to 24 years old, and accounted for the highest losses at $3.3 million.

Employment and job scams also more than doubled in 2021 to $2.6 million, and identity theft scams increased threefold to $10 million.

Who is getting scammed?

Older Australians suffered the greatest loss according to the ACCC’s figures, with people over 65 years old losing a total of $81.9 million throughout the year.

This demographic also reported the highest number of scams (46,282), followed by Australians aged 35 to 4 years old with 43,526 scams reported.

Men lost more to scams than women, with men reporting $190 million lost compared to $131 million reported by women.

No age group was exempt from losing money to scams, but the amount lost to scams did increase with age in 2021.

Source: https://www.savings.com.au/news/scamwatch-2021

The risk of card-not-present transactions

When it comes to card fraud, however, card not present (CNP) transactions continue to dominate, making up 87% of total transactions. In 2019, AusPayNet launched the CNP Fraud Mitigation Framework to address and control this type of fraud.

Usually CNP fraud involves breaches by third parties, through hacking of IT systems of a retailer or other company. Stolen card details can then be stored by criminals and used well after the breach. Card on file transactions – where a customer keeps their card on file with a merchant they use regularly – are also becoming a preferred target of cybercriminals.

The good news about card fraud

Global fraud losses for card issuers, merchants and acquirers of card transactions from merchants and ATMs are large, totalling almost US$28 billion in 2018 – a huge increase from the US$7.6 billion lost back in 2010.[1]

Having said this though, in the past couple of years, the number of cases of payment fraud globally has been declining. This success has come through coordinated action within the payments industry, through measures including:

• a widespread roll out of chip and PIN (or chip and signature in the US) for card transactions at a physical point of sale (POS)
• the use of strong two-factor authentication for ‘card not present’ payments, as mandated in several countries
• improvements in fraud mitigation software, including the application of machine learning and artificial intelligence, and
• the roll out of tokenisation to protect card information held on file in databases and in mobile handsets.

The future of scams

Globally, the COVID-19 pandemic has seen a spike in scams seeking to exploit fears about the virus, which include targeting government payments and superannuation withdrawals. In Australia, just before the pandemic broke out in early 2020, there was also a spike in scam activity related to bushfire donations.

In response, governments and financial institutions are taking responsibility to educate themselves, consumers and businesses about the types of scams out there to help others avoid being exploited. They’re also doing more to identify and track account takeovers, shutting down “fake named” and “mule” accounts that scammers use to receive payments.

Predictions on fraud and scams are almost impossible to make, as criminals are always changing their methods and targets, partly to circumvent government efforts to address fraudulent activity. However, by having an action plan of “education, awareness and tracking”, governments, banks, consumers and businesses can take control to prevent themselves from being another scam statistic.

Looking ahead

As the world of payments continues to make strides forward, Australian consumers are likely to be at the forefront of the next evolution. At Indue, we help businesses adapt and meet the changing expectations of consumers, by delivering innovative, compliant and secure payment systems.

To learn more about the trends shaping the payments landscape and what it means for your business, contact us today

[1] Nilson Report, The Nilson Report Issue 1164, November 2019.

The competitive playing field for banks is evolving quickly, introducing agile new competitors and challenging traditional formulas for success. Customers, not products or business lines, are the centre point of strategies and business models today. The ability to leverage large volumes of data and new technologies to understand customers’ journeys and deliver personalised offers and experiences is now considered critical to driving loyalty, engagement and, ultimately, growth.

Backed by insights from 8000 global customers and 140 bank C-level executives, the World Retail Banking Report 2022 discusses how banks can seamlessly embed themselves in the customers’ digital journeys to enhance loyalty and drive growth by leveraging data and AI/ML technologies.

Have a look at the new World Retail Banking Report 2022

Source: Capgemini 2022

Australia’s New Payments Platform (NPP), now available to more than 75 million account holders, has experienced steady growth since its 2018 launch.

But with NPP now expanding its use cases with the launch of new overlay services, such as the PayTo service, real-time volume is expected to gradually increase, recording a CAGR of 19.9% from 2021-2026.

How can banks and financial institutions throughout Australia prepare for and benefit from this growth?

Have a look at the new 2022 Prime Time for Real-Time global payments report for a comprehensive look at Australia’s real-time landscape.

The ACI Worldwide report shares 53 global real-time markets to show the trends, technologies and initiatives driving real-time success around the world.

The report includes:

• Economic impact analysis for 30 countries
• The increasing necessity of cloud and payment hubs
• Regional and local fraud management essentials

Source: ACI Worldwide 2022

8 out of the 10 fastest Data Holders are customer owned banks

In Feb Frollow published their report on Open Banking API performance, comparing the speed and reliability of Data Holder APIs. The report shows that when providing transactional data, 8 out of the 10 fastest Data Holder brands are mutuals.

Though, the fastest Data Holder is not a mutual: Neobank 86:400 was fastest in February, just as they were the previous 5 months.

 

Mutuals aren’t just leading the way as Data Holders, some of them are establishing themselves as first movers in the use of Open Banking data too.

In February three customer owned banks became ‘Active’ on the CDR Registry as Data Recipients. P&N Bank, bcu and Beyond Bank all activated their connections using the Frollo Open Banking platform, as one of the final steps before launching their Open Banking powered financial wellbeing apps.

Tonina Iannicelli (Senior Manager, Digital, Beyond Bank) knows how critical it is to leverage technology for the benefit of their customers. “Open Banking provides us the opportunity to work for and with our customers by doing the heavy lifting on behalf of our customers, collecting their financial data from various institutions to help manage their finances – all in one place.

This is just the start, and we are excited to see how else we can work with our customers to get them decisions quicker, offer services that they value, and continue to nurture our relationship with them”.

P&N Group General Manager Technology Transformation, Erik Fenna, said unlike the listed banks, customer-owned banks such as the Group’s retail brands P&N Bank and bcu have a laser focus on customers rather than third-party shareholders, meaning the customer is at the heart of everything they do.

“We are focused on making banking easier for our customers by putting more control of their overall financial wellbeing and day to day banking in their hands through Open Banking,” Mr Fenna said.

“By offering customer-centric technology that solves key financial pain points, such as money management and the home loan application process, not only will we make it easy to bank with us, importantly we will also make it easy for our customers to get ahead.”

Simon Docherty (Chief Customer Officer, Frollo) isn’t surprised to see mutuals leading the way. He explains: “Open Banking offers the biggest opportunity for customer centric businesses, as it can unlock better customer experiences, as well as more personalised products and services.

Their focus on delivering value for customers has made Open Banking the perfect tool for mutuals to deliver on their promise, by providing financial wellbeing tools, improved access to credit and better deals on their finances.

We’re excited to help those early adopters in the mutual bank sector use Open Banking to deliver better customer outcomes.”

 

Source: Frollo March, 2022.

Australians are ditching cash at the fastest rate in history as contactless payments and the boom of buy-now-pay-later methods threaten to radically reduce the use of physical money. The annual Global Payments Report predicts that in Australia, cash will account for only two per cent of value from all point-of-sale transactions by 2025. This doesn’t mean cash will only be used for two per cent of all transactions, but rather that the value of these cash purchases will pale in comparison to those made with other methods such as credit or debit cards.

The report also predicted that within two years, digital wallets (such as apps that allow customers to use their smartphone or smart device to pay) will overtake credit and debit cards to become the leading e-commerce payment method by 2024. Currently debit cards are most used payment method at the registers comprising 41 per cent of all transactions, followed by credit cards (35 per cent), digital wallets (11 per cent), cash (seven per cent) and buy-now-pay-later (four per cent). In Australia buy-now-pay-later services such as Afterpay are predicted to account for 14 per cent of all e-commerce purchases by 2025, up from its current 11 per cent. The steep decline in the use of cash comes as many Australians change their purchasing behaviour during the COVID-19 pandemic to avoid contact where possible. Analysis by the Australian Banking Association found that ATM withdrawals – perhaps the largest indicator of general cash use – decreased by 20 per cent in the year to August 2021. “COVID-19 accelerated trends in our society and changed the way we live our lives. Working from home will forever be more prominent within the workforce, we have steered away from using cash and as a result are seeing an increase in card and technology payments and the existing trend of doing banking online instead of in a branch has only continued,” said ABA chief executive Anna Bligh. “As we have seen more people go away from using branches, it’s no surprise to see banks invest in areas where customers prefer to bank, such as in their online platforms and apps. “Interestingly, one major Australian bank reported digital banking is now the primary channel for its customers aged between 16 and 69, with digital interactions up 10 per cent since 2019. This same bank reported a steady branch usage drop of 32 per cent since January 2019.” ABA data shows that one in ten Australians regularly leave home without taking their wallet, and more than one in three Australians use digital wallets on their smartphones at least weekly. As cash use declines, so too does the use of physical bank branches.

Source: 9news.com.au, Stuart Marsh, Senior Producer, 10/3/22

We are pleased to announce that Auswide Bank has selected Indue as their exclusive full-service payments partner.

An ASX-listed regional bank based in Bundaberg with 17 branches across Queensland, Auswide Bank has operated for more than 55 years with assets under management of more than $4 billion.

Auswide Bank has an Australia-wide lending presence supported through branches, business bankers, accredited mortgage brokers and online, and offers an extensive range of finance and banking products to help their customers realise their financial dreams.

Auswide Bank Managing Director Martin Barrett said the partnership announced today strengthens an already proven relationship, with Indue to provide end-to-end payment services that will support the bank’s digital transformation, provide a state-of-the-art customer experience and business outcomes.

“Auswide Bank has worked with Indue for 6 years and the extension of agreement is another exciting step in our relationship,” Mr Barrett said.

“Both organisations are focused on placing our customers at the centre of everything we do, and we couldn’t be more pleased to be partnering with Indue to help us continue to deliver outstanding service to our communities and customers across Australia.

“Indue will provide a full suite of end-to-end payment solutions, which is a key component of transforming our business with technology and providing digital payment choices for our customers, improving their experience and delivering stronger business outcomes.”

Indue CEO Derek Weatherley said Auswide Bank’s strategy was strongly supported by Indue’s strategy and Indue was very well placed to serve Auswide Bank in their mission to serve their customers.

“At Indue we have a deep commitment to our partners, and our ‘customer first’ approach is directly aligned to Auswide Bank’s focus on their customers and community,” Mr Weatherley said.

“This new partnership will provide Auswide Bank customers with access to a comprehensive suite of end-to-end payment services delivered through Indue’s ongoing digital transformation program.

“Indue reinvests our profits into research and development to ensure our customers are continuously able to deliver relevant payment solutions to their customers. Auswide Bank and its stakeholders will be a major beneficiary of these investments as we continue to develop and deliver these innovative payment solutions.

“Auswide Bank will benefit by tapping into Indue’s evolving suite of digital payments that bring real time, data rich, frictionless payments to customer’s anywhere, anytime, with the peace of mind brought by our market leading real time fraud and AML capabilities.

“The payment services suite provided to Auswide Bank will include Direct Entry, BPAY, NPP, Financial Crimes, Anti-money Laundering, Card Services, High Value Payments and PEXA. Auswide Bank plan to launch NPP and NPP Fraud as a matter of priority.”

Mr Weatherley said the teams were looking forward to working together for a swift transition over coming months.

-ENDS-

For more information please contact:

Indue Head of Marketing & Communications – Clare Mitchell
[email protected] – 0429 889 556

Auswide Bank Head of Marketing – Karyn Kelly

[email protected] – 0414 011695