The UK struggles with credit card fraud. Reasons and solutions

In the United Kingdom, card fraud continues to be a serious problem. Over the past three years, country residents have lost nearly £60 million due to fraudulent operations with their cards. Credit card holders are a more attractive target than debit card users, but overall, everyone is consistently affected. Although open sources note that amount of damage decreased in 2023 compared to 2021, it is difficult to name this a positive trend.

Then chargebacks are the only option in attempt to recover lost funds in such cases, but a lot depends on the financial literacy of cardholder and fraudster as well. Often, chargeback cases are not resolved in favor of the cardholder. Unfortunately, statistics do not provide accurate data on how much money has been recovered using this method. Despite the serious measures implemented by payment systems, fraudsters often find ways to bypass them and steal funds from cards. In respond to this, many users have turned their attention to open banking payment method as cards alternative, not only as a more convenient way to pay but also as more secure one.

Is open banking really safer?

If we examine its technology in more detail, we can say — yes, we have reasons to believe that it will be much safer than credit card. Not considering possible scam schemes where users themselves transfers funds to a fraudster, no method can provide a 100% guarantee in this case. However, from an infrastructure view, open banking does better. Since payment occurs through interbank communication and following client confirmation, there are practically no ways to "intercept" such payment. Meanwhile, cards are less secure because their data can be compromised and used for payments at websites that lack 3DS measure. Many fraud schemes are built precisely on the theft of card data and further search for ways to cash out the funds.

With this rise in card fraud, open banking presents an alternative option for users. This payment method offers a high level of security and control over financial data, making it a potential solution to help protect one's funds. To learn more about how the technology works and its main advantages, you can read our previous article where we analyzed it in detail.

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