2020 Foresight Report: Best Practices in Managing the Credit Risk Cycle

Publisher Name :
Date: 29-Apr-2013
No. of pages: 89


The report provides information and insights into best practices in managing credit risks associated with credit cards:

• Provides a global snapshot of card fraud and key fraud hotspots across the world

• Comprehensive analysis of card fraud market size in developed and emerging markets

• Analysis of various types of card frauds and its implication on issuers and acquirers, customers and merchants

• Detailed analysis of macroeconomic, regulatory and operational challenges in managing credit card risks

• Provides emerging trends in credit card risk management by governments, regulatory bodies and market participants

• Provides a detailed framework of best practices in credit card risk management, segmented by issuers, acquirers, network providers and merchants

• Includes case studies showcasing the best practices with examples and their impact assessment


The convenience offered by credit cards to make payments is exploited for fraudulent activities, resulting in the loss of millions of dollars every year around the world. In order to control and limit these risks and losses, a proper risk management framework is required to be established. Over the last five years, card issuers, acquirers, merchants and network operators have adopted and implemented a host of security measures, regulations and business strategies to lower the chances of fraud and credit losses. However, they are limited by several macroeconomic, regulatory and operational challenges. The management of risk associated with credit cards requires continuous efforts from every participant of the card payment industry. However, to do so, development of a best practice framework is of utmost importance. A well developed framework facilitates a better understanding of risks and areas which require attention from the intended parties, and formulates strategies to address them.


• This report provides a comprehensive analysis of best practices in credit card risk management with emerging trends in market practices by issuers, acquirers, network operators and merchants

• The report also covers regulatory developments across key regions such as Europe, North America and Asia-Pacific

• It provides current fraud statistics in developed and emerging markets

• It outlines key macroeconomic, regulatory and operational challenges in managing credit card risks

• It illustrates adoption and implications of best practices with the help of detailed case studies

Reasons To Buy

• Credit card risks result in the loss of millions of dollars every year impacting every participant of the cards and payments industry

• Gain insight into various risks resulting from macroeconomic developments, customer protection laws and operational difficulties

• Understand the emerging trends in managing risk and limiting exposure to credit loss

• Assess the regulatory landscape in key regions around the globe

• Gain insight into the development of an effective risk management framework

Key Highlights

• Although card fraud is much higher in value terms in developed economies such as the US, the UK and France, these countries have been successful in limiting the growth of fraud by adopting advanced security measures, innovative products and strict regulations. Emerging economies like China and Russia have lagged behind in introducing such measures and have therefore witnessed significant growth in card fraud.

• Among the developed markets, the value of card fraud was highest in the US.

• Regulations such as the single euro payment area card framework (SEPA) and anti-money laundering regulation have indirectly helped in the managing of these risks. Other measures taken by regulatory bodies which include restriction on issuance of credit cards to high risk customers, increases in age requirement, high income requirements for issuance of a credit card and a limit on the number of cards a consumer can have has also helped in managing risks.

• Industry participants have adopted and implemented a host of security measures, regulations and business strategies to lower the chances of fraud and credit losses. These measures include EMV chip and PIN credit cards, anti-skimming technologies, guarantors for high risk customers, secured credit cards and charge cards, behavior analysis, high-end security for online shopping such as virtual keypads, SMS verifications and one-time passwords.

2020 Foresight Report: Best Practices in Managing the Credit Risk Cycle

Table of Contents
1 Executive Summary
2 Credit Card Fraud Dynamics
2.1 Global Snapshot of Card Fraud
2.1.1 Card fraud hotspots around the world
2.1.2 Card fraud in developed and emerging economies
2.2 Overview of Card Fraud and its Impact
2.2.1 Types of card fraud
2.2.2 Ramification of card fraud
2.3 Challenges in Managing Credit Card Risks
2.3.1 Macroeconomic challenges
2.3.2 Regulatory challenges
2.3.3 Operational challenges
3 Emerging Trends in Managing Credit Card Risk
3.1 Role of Government and Credit Bureaus in Managing Credit Card Risk
3.1.1 Global developments
3.1.2 Europe
3.1.3 North America
3.1.4 Asia-Pacific
3.1.5 Other key countries
3.2 Trends in Risk Management at Financial Institutions and Service Providers
3.2.1 Issuers and acquirers
3.2.2 Network providers
3.2.3 Merchants
4 Best Practice Framework in Credit Card Risk Management
4.1 Risk Management Framework
4.1.1 Issuers
4.1.2 Acquirers
4.1.3 Network providers
4.1.4 Merchants
4.2 Best Practices Case Studies
4.2.1 Adoption of modern tools and analytical applications
4.2.2 Best practices - adoption of innovative products
4.2.3 Best practices - adoption of EMV Chip-PIN technology
4.2.4 Best practices - third party expertise to manage delinquencies
5 Appendix
5.1 Late Payments and Non-Payments
5.1.1 Types of delinquency
5.1.2 Key reasons for delinquencies
5.1.3 Non-payments
5.2 Methodology
5.3 Background
5.4 Contact Us
5.5 About Timetric
5.6 Disclaimer

List of Tables
Table 1: Card Fraud in Developed Economies (US$ Million), 2008-2012
Table 2: Card Fraud in Developing Economies (US$ Million), 2008-2012
Table 3: Real GDP Growth (%), 2007-2012
Table 4: Unemployment Rates in Developed Economies (%), 2007-2012
Table 5: Unemployment Rates in Emerging Economies (%), 2007-2012
Table 6: Charge Card Industry Market Size (Million), 2008-2012

List of Figures
Figure 1: Credit Card Fraud Dynamics
Figure 2: High Risk Zones
Figure 3: Card Fraud in Developed Economies (US$ Million), 2008-2012
Figure 4: Card Fraud in Developing Economies (US$ Million), 2008-2012
Figure 5: Key Challenges in Managing Credit Card Risks
Figure 6: Real GDP Growth (%), 2007-2012
Figure 7: Unemployment Rates in Developed Economies (%), 2007-2012
Figure 8: Unemployment Rates in Emerging Economies (%), 2007-2012
Figure 9: Trends in Credit Card Risk Management
Figure 11: Credit Ratings and Requirements
Figure 12: Adoption of Risk Management Tools
Figure 13: Launch of Contactless Cards Worldwide, 2008-2012
Figure 14: Worldwide Contactless Card Market Size, 2008-2017
Figure 15: Online Security Device
Figure 16: Emergence of Charge Cards (Million), 2008-2012
Figure 17: Overview of PCI Data Security Standards
Figure 18: PIN Entry Device Security Requirements
Figure 19: Payment Application DSS Requirements
Figure 20: Verified by Visa and MasterCard SecureCode
Figure 21: Best Practice Framework in Credit Card Risk Management
Figure 22: Best Practices For Issuers
Figure 24: Best Practices For Network Providers
Figure 26: The Case of CartaSi
Figure 27: The Case of Banco BHD
Figure 28: The Case of China Merchants Bank
Figure 29: Key SAS Products
Figure 30: The Case of Viseca Card Services SA
Figure 31: Falcon® Fraud Manager
Figure 33: The Case of Intesa Sanpaolo Card
Figure 34: BankAmericard® Secured Credit Card Features
Figure 35: The Case of Bank of America
Figure 36: Key Features of iZettle's EMV Chip-PIN Card Reader
Figure 37: The Case of Visa and iZettle
Figure 38: Key Features and Benefits of CUCollectTM Credit Card Collections Solution
Figure 39: The Case of HEWFCU
Figure 40: Delinquency Levels and Risk
Figure 41: Recessions and Delinquencies in the US
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