Strengthening Payment Security: PCI Security Standards Council Expands Influence in the Middle East Amid Rising Fraud Risks
Charles M. Walls | April 26, 2024 | Views: 182
The Payment Card Industry (PCI) Security Standards Council is setting its sights on expanding its influence to the Middle East. This decision comes in response to the escalating use of card payments in the region and the accompanying rise in payment card fraud. In a strategic move, the Council appointed a regional director for the Middle East in April, tasked with collaborating with regulators, financial bodies, and service providers to bolster transaction security.
The urgency of these efforts is underscored by projections from the annual "Nilson Report" of December, which forecasts global card fraud losses to swell from $28 billion in 2020 to $36 billion in 2024. Despite this increase, the proportion of fraud per transaction is anticipated to dip slightly to 6.5 cents per $100 spent. Nitin Bhatnagar, the PCI Security Standards Council's regional director for India and South Asia, who now also oversees the Middle East, emphasized the need for a security-centric mindset amidst rising cyber threats such as malware and phishing.
As the payment industry evolves, with non-traditional payment methods becoming more prevalent, the Middle East has experienced a noticeable shift. A report by the Boston Consulting Group from September 2023 highlighted that while card payments still led with over $30 trillion in transactions in 2023, alternative methods are quickly catching up, indicating a compound annual growth rate of 6.2% for the industry through 2027. This growth, however, is shadowed by a burgeoning fintech sector, projected to reach revenues of $520 billion by 2030.
Consumer preferences in the Middle East are also evolving, with digital wallets now favored over cards by a margin of 60% to 27%, according to a 2021 McKinsey & Company study. This shift has not gone unnoticed by cybercriminals, heightening concerns among business leaders in the region. For instance, 70% of executives in the United Arab Emirates expect financial crime risks to increase over the next year, mirroring concerns in the United States.
To keep pace with these changes, the PCI Security Standards Council introduced a new standard for mobile payments, the PCI Mobile Payments on COTS (MPoC), in November 2022. This standard is aimed at securing mobile-app-based transactions, reflecting the growing trend towards mobile and contactless payments. "As criminals increasingly target these technologies, it's crucial for organizations to prioritize security," Bhatnagar notes.
The Middle East and Africa (MEA) are particularly focused on combating payment fraud as they expand financial inclusion. Innovations like the Tazama Project's open source antifraud platform and Network International's adoption of Mastercard's AI-powered solutions are testaments to the region's commitment to improving security. With 64% of executives planning to invest in antifraud technology and over half increasing their cybersecurity budgets, the fight against cybercrime is becoming a central aspect of business strategy in the region.
