Payment fraud is increasingly becoming a concern in Cyprus, although recent statistics indicate that the country maintains lower fraud levels compared to the euro area average. The Central Bank of Cyprus has published its inaugural statistical report on payment fraud, summarizing trends from the second half of 2024, and it highlights that criminals utilize various non-cash transaction types to carry out fraudulent activities.
A significant finding from the report reveals that card fraud constitutes 94% of all fraudulent transactions by volume. However, in terms of financial impact, the most substantial losses stem from credit transfers, which comprise 60% of fraudulent activities. In contrast, card payments account for 39% of total fraud value.
This distinct disparity in fraud patterns indicates that while card misuse is prevalent, high-value fraud cases often involve schemes that trick individuals into making direct transfers to fraudsters. The Central Bank’s analysis pointed out that 75% of fraudulent credit transfers were attributed to scams, where victims were deceived into making payments under false pretenses. Conversely, 99% of card fraud incidents involved the use of stolen or unauthorized customer information.
Interestingly, the report found that card fraud was predominantly tied to online transactions, though legitimate card payments mainly occur at physical points of sale.
Additionally, fraudulent activities pose a significantly higher risk in cross-border transactions compared to domestic ones. The risk of fraud in card transactions outside of Cyprus was noted to be about 25 times greater. This stark contrast underlines the difficulties faced by regulators and payment providers in safeguarding international transactions.
The report outlines that approximately 94% of all fraudulent payment transactions involved cards, equating to roughly 13,000 cases within the six-month period analyzed. In comparison, all other payment services combined accounted for only about 1,000 fraudulent transactions, showcasing the concentration of fraudulent activities in card payments.
Among the losses, credit transfers represented the most significant portion at €1.8 million, or 60% of total losses, followed by card fraud at €1.2 million, representing 39%. Notably, fraudulent activities related to other payment services were minimal, totaling less than €50,000.
When looking at the euro area as a whole, similar trends in fraud activity were evident, albeit with varying proportions. In this region, fraudulent credit transfers were responsible for 58% of total losses, while card fraud contributed 30%.
It is crucial for the Central Bank to monitor and disseminate payment fraud data, as it plays a vital role in enhancing transparency and shaping future regulatory measures. The release of this statistical information will help establish a benchmark for analyzing trends in the future.
In another note regarding the financial landscape of Cyprus, recent reports indicate that the assets under management have risen to €10.7 billion, marking a 6.64% increase from the previous quarter, despite a slight decline in the number of fund management entities. This growth occurred even as the number of supervised management companies and collective investment undertakings dropped by 1.8% year-on-year, with the new total settling at 322.
In summary, while payment fraud is on the rise in Cyprus, a nuanced understanding of its patterns, particularly through card transactions and credit transfers, may help in tailoring effective strategies to mitigate risks and bolster the security of financial transactions in the country. The proactive approach of monitoring and reporting by the Central Bank will be instrumental in addressing these challenges going forward.