Chip-and-PIN, advanced real-time analysis of transactions and other techniques are all starting to prove effective in reducing credit and debit card fraud, according to the Association of Payment Clearing Services (Apacs) and analyst firm Datamonitor.

Losses to credit card fraud in the UK fell by over five per cent in 2003 to £402.4m, with even bigger drops expected as chip-and-PIN is rolled out in the UK.

'The various efforts spent by the various players in preventing card fraud have finally paid off,' said Datamonitor financial analyst Karina Purang.

But while the various tactics employed are stamping out fraud in some areas, fraudsters are targeting other areas, which Purang believes may lead to an increase in identity theft.

One of the main areas of fraud growth comes with card not present (CNP) fraud, which along with counterfeit and fraud from lost and stolen cards, counts for 80 per cent of all fraud losses.

CNP fraud has risen nearly 300 per cent since 1999 to an all time high of £116.4m in 2003.

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