There’s never the “right guy” to steal from, but whoever breached Phillip Lowe’s credit card account chose the wrong person. Phillip Lowe, the head of the Reserve Bank of Australia (RBA), is better known for bringing cost accounting to credit card interchange. In doing so, he not only slashed the bank card tariff for this 25 million person market, but he set a precedent for interchange pricing under the EU Payment Services Directive (PSD) and the U.S.’ Dodd-Frank.
- Australia’s Reserve Bank chief Philip Lowe reveals he was stung by online credit card fraud
- Banks and credit card schemes across Australia are bracing for a sharp regulatory poke over exploding levels of online credit card fraud after the Governor of the Reserve Bank of Australia, Philip Lowe, revealed he was personally stung just days ago.
- In a sublime piece of timing, Lowe made the candid disclosure during a keynote speech to the nation’s payments industry bosses in Sydney on Monday, leaving bankers and credit card schemes red-faced over online fraud rates that are still rising strongly, despite their efforts.
Lowe notes in his speech:
- “Last week I had fraud on my own credit card account. All of my accounts and cards got frozen. So over the weekend I had to resort to emergency cash usage to make my payments,” Lowe told the room.
- “So this issue is very much top of mind for me at the moment.”
- A major gripe of merchants is that banks and schemes are still allowed to shift the bulk of online fraud losses onto them, with retailers pushing for banks and issuers to pick up the tab for counterfeit card purchases.
- With the last fraud figures chalking up a whopping $476 million, merchants are angry that they are being stuck with a massive liability shift.
- “The solution here is to reduce the fraud cost to the system. Fraud ends up as a cost to the merchant, but it also reduces people’s confidence in the system,” Lowe said.
- Lowe’s revelation will badly rattle major institution and card schemes who have persistently pushed the argument that online card fraud, dubbed card-not-present fraud, is under control, despite persistent sharp rises.
Having survived several banking audits while at HFC and Citi, one thing I learned is that you never mislead a regulator, under any circumstance. They have long memories and react well to an apology for an exception.
I feel sorrier for the bankers who suggested CNP fraud is under control than I do for the fraudster who will likely be caught.
Keep an eye out for Mercator’s latest fraud publication which should post in early December; we cover the topic of payment card disputes as a leading indicator to credit card fraud.
