By contrast, counterfeit fraud represented just 20% of fraud cases.
"The challenge in Germany is to avoid CNP losses without impacting the customer experience and genuine card use," said Martin Warwick, FICO's fraud chief for Europe. "As CNP fraud is spread across multiple merchant categories, card issuers need to gain an in-depth understanding of individuals' specific e-commerce behavior."
In contrast to CNP, more than half of cross-border, card-present fraud occurred in only a few merchant categories: ATMs, jewelry, electrical goods, grocery stores, supermarkets and smaller stores selling products such as wine, beer and spirits.
"Criminals try to get cash or goods that they can easily turn into cash," Warwick explained. "Jewelry and electrical items are always near the top of their shopping lists. One easy way to thwart criminals is to combine analytics with tougher fraud rules around these categories, while relaxing the rules for good customers who are known to shop in these categories while they are abroad."
Cash is still the main driver for criminals, with ATM fraud accounting for a third of all cross-border card-present fraud, and an even higher percentage of domestic card-present fraud. "There can be legacy system issues with major banks in terms of ATM traffic flows," Warwick said.
"For example, in the UK our investigations showed that at some banks the internal routing of ATM transactions was bypassing the bank's fraud detection system. Banks need to be confident in their defensive systems and adopt real-time detection to fight fraud effectively."