IDEAS home Printed from https://ideas.repec.org/a/fip/fedker/00018.html
   My bibliography  Save this article

Controlling security risk and fraud in payment systems

Author

Listed:
  • Richard J. Sullivan

Abstract

In late 2013, a security breach at a major retailer exposed information on 40 million payment cards. The number of data breaches has increased in recent years, and the targeted use of exposed data suggests a decentralized \\"virtual fraud factory\\" driving payment fraud. The direct costs of third-party fraud are high for consumers, banks, and merchants, but the indirect costs could be even higher if these incidences undermine the public's confidence in non-cash payments. Sullivan examines trends in payment fraud, prevention, and data protection to evaluate recent security performance. He then highlights several options to improve security and prevent fraud, including coordinated changes to the control structure over payment risk. Policymakers will need a broad perspective to judge weaknesses in this structure and its ability to adapt as new fraud methods arrive.

Suggested Citation

  • Richard J. Sullivan, 2014. "Controlling security risk and fraud in payment systems," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 5-36.
    • Handle: RePEc:fip:fedker:00018
    as

    Download full text from publisher

    File URL: https://www.kansascityfed.org/documents/1091/2014-Controlling%20Security%20Risk%20and%20Fraud%20in%20Payment%20Systems.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Geoffrey R. Gerdes, 2008. "Recent payment trends in the United States," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 94(Oct), October.
    2. Michele Braun & James J. McAndrews & William Roberds & Richard J. Sullivan, 2008. "Understanding risk management in emerging retail payments," Economic Policy Review, Federal Reserve Bank of New York, vol. 14(Sep), pages 137-159.
    3. Jack Hirshleifer, 1983. "From weakest-link to best-shot: The voluntary provision of public goods," Public Choice, Springer, vol. 41(3), pages 371-386, January.
    4. Moore, Tyler, 2010. "The economics of cybersecurity: Principles and policy options," International Journal of Critical Infrastructure Protection, Elsevier, vol. 3(3), pages 103-117.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jesse Leigh Maniff & Richard J. Sullivan, 2016. "Data Breach Notification Laws," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 65-85.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. William Roberds & Stacey L. Schreft, 2009. "Data security, privacy, and identity theft: The economics behind the policy debates," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 33(Q I), pages 22-30.
    2. Richard J. Sullivan, 2010. "The changing nature of U.S. card payment fraud: industry and public policy options," Economic Review, Federal Reserve Bank of Kansas City, vol. 95(Q II), pages 101-133.
    3. Subhasish M. Chowdhury & Iryna Topolyan, 2013. "The Attack-and-Defence Group Contests," University of East Anglia Applied and Financial Economics Working Paper Series 049, School of Economics, University of East Anglia, Norwich, UK..
    4. Camacho, Carmen & Hassan, Waleed, 2023. "The dynamics of revolution: Discrimination, social unrest and the optimal timing of revolution," Economic Modelling, Elsevier, vol. 128(C).
    5. repec:osf:socarx:ckxa8_v1 is not listed on IDEAS
    6. Keith B. Anderson & Erik Durbin & Michael A. Salinger, 2008. "Identity Theft," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 171-192, Spring.
    7. Vicary, Simon & Sandler, Todd, 2002. "Weakest-link public goods: Giving in-kind or transferring money," European Economic Review, Elsevier, vol. 46(8), pages 1501-1520, September.
    8. Daniel E. O'Leary, 2018. "DNA Mining and genealogical information systems: Not just for finding family ethnicity," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 25(4), pages 190-196, October.
    9. Byung Cho Kim & Dongryul Lee, 2009. "The Effect of Project Types and Technologies on Software Developers' Efforts," Economics Bulletin, AccessEcon, vol. 29(3), pages 1796-1804.
    10. Atallah, Shadi S. & Huang, Ju-Chin & Leahy, Jessica & Bennett, Karen, 2020. "Preference Heterogeneity and Neighborhood Effect in Invasive Species Control: The Case of Glossy Buckthorn in New Hampshire and Maine Forests," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304623, Agricultural and Applied Economics Association.
    11. Geoffrey Heal & Howard Kunreuther, 2005. "IDS Models of Airline Security," Journal of Conflict Resolution, Peace Science Society (International), vol. 49(2), pages 201-217, April.
    12. Trofimov, Ivan D., 2017. "International policy entrepreneurship and production of international public goods: the case of multilateral trade regime," MPRA Paper 80819, University Library of Munich, Germany.
    13. Stefano Barbieri & David Malueg & Iryna Topolyan, 2014. "The best-shot all-pay (group) auction with complete information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 57(3), pages 603-640, November.
    14. Luca Dall’Asta & Paolo Pin & Abolfazl Ramezanpour, 2011. "Optimal Equilibria of the Best Shot Game," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(6), pages 885-901, December.
    15. Alejandro Caparrós & Michael Finus, 2020. "Public good agreements under the weakest‐link technology," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 555-582, June.
    16. Todd R. Kaplan & Bradley J. Ruffle, 2012. "Which Way to Cooperate," Economic Journal, Royal Economic Society, vol. 122(563), pages 1042-1068, September.
    17. Galeotti, Andrea & Goyal, Sanjeev, 2007. "The Law of the Few," Economics Discussion Papers 2981, University of Essex, Department of Economics.
    18. Le Maux, Benoit & Rocaboy, Yvon, 2012. "A simple microfoundation for the utilization of fragmentation indexes to measure the performance of a team," Economics Letters, Elsevier, vol. 116(3), pages 491-493.
    19. Conybeare, John A C & Murdoch, James C & Sandler, Todd, 1994. "Alternative Collective-Goods Models of Military Alliances: Theory and Empirics," Economic Inquiry, Western Economic Association International, vol. 32(4), pages 525-542, October.
    20. Mazaher Kianpour & Stewart J. Kowalski & Harald Øverby, 2021. "Systematically Understanding Cybersecurity Economics: A Survey," Sustainability, MDPI, vol. 13(24), pages 1-28, December.
    21. K. Mccarthy & F. van Doorn & B. Unger, 2008. "Globalisation, Tax Competition and the Harmonisation of Corporate Tax Rates in Europe: A Case of Killing the Patient to Cure the Disease?," Working Papers 08-13, Utrecht School of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedker:00018. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kira Lillard (email available below). General contact details of provider: https://edirc.repec.org/data/frbkcus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.