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Data for this episode of Truth In Data provided by Mercator Advisory Group’s report – Prepaid Card Fraud
- The rate of payments fraud by dollars continues to outpace total dollars in payments
- Overall though, payments fraud is rare: just 1/10th of one percent of total dollars (10bps)
- Virtual Gift Card Fraud: purchased anonymously and sold anonymously; typically yield $80 cash for $100 v-card
- With virtual gift card fraud, the merchant loses double – having lost the card and the payment to purchase it
- Fraud rates by dollar for Prepaid are substantially lower (5.91 bps) than fraud rate for Debit (9.35 bps)
- Fraud rate for number of transactions in Prepaid (3.49 bps) was also lower than debit (4.72 bps)
About this report
While prepaid card fraud is lower than debit card fraud, debit card fraud is shrinking due to chip technology, while prepaid card fraud is rising. Since chip technology is too expensive for prepaid, processors will need to use more analytic techniques.