Sep 25, 2006

Nilson Report: Fraud losses are a cost of doing business (i.e. not even a nuissance?)

This is tucked away at the back of June's Nilson Report:
"Fraud losses are a cost of doing business, and that cost remains manageable for credit card issuers in the U.S. As long as fraud doesn’t go up above 7.0¢ per $100 in volume (i.e. 7 basis points), issuers will continue to favor customer convenience over security."

7 basis points is a manageable cost of doing business. It's not even the nuissance I wrote about in my prior post (see Card fraud is a nuisance, interchange erosion is life threatening, where fraud losses are compared to the much bigger problem of interchange erosion of 40, 50 or 60 basis points or more).

1 comment:

Colin said...

Interesting... I am not convinced this is a sustainable model to view fraud this way. Two years ago in Canada, the press got really hot on this topic, taking an aggressive stance against the Banks. They were basically taking the view that one instance of fraud is bad for the individual who was defrauded, so fraud is bad at any level.