The payments industry has long been creating new innovations to combat fraudsters in order to create a secure environment for financial transactions.

From holograms and the tamper-evident signature panel to card validation codes and EMV chip, many of these security advances have become industry standards.

However, they can’t do it alone. Along the way, consumer education remains a key part of the strategy to protect cardholder account information and to help banks and merchant businesses prevent losses due to payment card fraud.

Keeping consumers informed about what they can do to protect themselves is a crucial preventive measure in the evolving global and regional fraud landscape.

A good start is in understanding the different kinds of fraud associated with debit and credit card transactions – there are eight major kinds.

The first category, lost or stolen cards, is a relatively common one, and should be reported immediately to minimize any damages.   

The second is called “account takeover” or when a cardholder unwittingly gives personal information (such as home address, mother’s maiden name, etc.) to a fraudster, who then contacts the cardholder’s bank, reports a lost card and change of address, and obtains a new card in the soon-to-be victim’s name.

The third is counterfeit cards, when a card is “cloned” from another and then used to make purchases. In Asia Pacific, 10% to 15% of fraud results from malpractices such as card skimming but this number has significantly dropped from what it was a couple of years prior, largely due to the many safety features put in place for payment cards, such as EMV chip.

The fourth is called “never received," or when a new or replacement card is stolen from the mail, never reaching its rightful owner.

The fifth is fraudulent application, or when a fraudster uses another person’s name and information to apply for and obtain a credit card.

The sixth is called “multiple imprint.” That's when a single transaction is recorded multiple times on old-fashioned credit card imprint machines known as “knuckle busters."

The seventh is collusive merchants, or when merchant employees work with fraudsters to defraud banks.

The eighth is mail order/telephone order (MO/TO) fraud, which now includes e-commerce, and is the largest category of total payment card fraud in Asia Pacific, amounting to nearly three-quarters of all fraud cases. The payments industry is  working to improve card verification and security programs to prevent fraud in so-called “card-not-present” transactions online or via mail order and telephone transactions.

Consumers ultimately have a role to play in card prevention. Helping them knowing how fraud happens is a good way to take steps to prevent it.

Barry Wong is vice president and Asia Pacific Regional Lead, Customer Security & Risk Services, MasterCard