Estonia stands out for the high rate of card usage and low rate of fraud
Eesti Pank Payment and Settlement Systems Department
- In Estonia, as in Finland, bank cards are used a lot, but there is relatively little card fraud
- There were five cases of bank card fraud in Estonia for every 1000 residents of the country, with the loss averaging 150 euros per case
- There is only one quarter as much internet fraud in Estonia as in other European countries, as stricter security requirements are widely applied here
- It is important to be careful when using ATMs outside Europe
A report released by the European Central Bank shows that bank card fraud in the the Single Euro Payments Area (SEPA) affected 11.3 million transactions worth a total of 1.4 billion euros in 2013, the highest figures for the past five years. The total value of the transactions affected was 8% higher than a year earlier, and the number of cases of fraud was 25% higher. The frauds mainly occurred over the internet, where online trading is used increasingly.
There were five cases of bank card fraud in Estonia for every 1000 residents of the country, with the loss in each case averaging 150 euros. In the SEPA as a whole there were 20 fraud cases per 1000 residents, while the rate was highest in the UK at 68 cases per 1000 residents.
Cases of bank card fraud using cards issued in Estonia continue to account for a small share of card transactions, and there were 6200 cases in 2013 with a total value of 950,000 euros. During that same year, 287 million card transactions were made, with a total value of 9 billion euros. The total value of card fraud increased by 8%, and the number of cases increased somewhat faster, but this is in line with the higher incidence of card payments, the total value of which rose by around 8%. Fraudulent transactions accounted for 0.013% of total value, which is one third of the SEPA average, and 0.002% of all transactions, which is one tenth of the SEPA average. Card fraud is generally less common in countries like Bulgaria and Croatia where card payments are used less, but Estonia and Finland stand out for having high rates of card usage and low rates of fraud.
Card fraud in Europe mainly occurs with payments initiated over the internet. Fraud worth 1.4 billion euros was committed using cards issued in Europe, of which 66% or 958 million euros was internet fraud, 20% or 289 million euros was fraud at card payment terminals, and 14% or 202 million euros was fraud involving ATMs. The value of card fraud committed over the internet was one fifth larger in 2013 than in 2012, while the value of fraud at ATMs was 14% lower and fraud at payment terminals was 18% down. Improved security measures have helped combat fraud at ATMs and card terminals, with chip-based technology that is hard to forge becoming more widespread in cards and terminals, and skimming device detectors being used.
Estonia differs from other European countries in its low level of internet-based fraud. Fraudulent online card transactions worth 390,000 euros were made in 2013, which is one quarter of the amount elsewhere in Europe in the SEPA. Frauds at ATMs and payment terminals caused losses of 560,000 euros. Online fraud may have been low because Estonians do little shopping online, and also because of the 3D Secure card payment security procedures used by Estonian banks. These procedures require card holders making payments online to enter additional security data, making it harder for anyone else to use the card fraudulently. It is important to remember when shopping online that purchases are only secure if the online merchant also uses this security procedure.
While there are few fraud cases involving cards issued in Estonia online or at payment terminals, the value of fraud at ATMs as a share of the total value of card transactions is about the same as the SEPA average. Most of this card fraud occurs outside Europe. ATMs in Estonia are secure because of their chip-based technology, and few frauds are committed within the country.
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