Nine in 10 consumers (91%) polled in a new payment fraud survey of 1,000 Canadian adults conducted by global management and technology consultancy Capco, a Wipro company, fear their online data could be used to make impersonation easier or reveal answers to security questions.

Card or card data theft (45%), identity theft (45%) and account takeover (41%) are the fraud types that worry respondents most, the survey found. More than a third (36%) of respondents said they had been targeted by attempted payment fraud over the previous two years. Among those respondents, 37% noticed a purchase they did not make, 32% spotted a phishing attempt and 20% experienced attempted card or card data theft. For wider context, the Canadian Anti-Fraud Centre, which aggregates fraud reports from consumers and businesses across the country, has recorded hundreds of millions of dollars in reported victim losses each year in recent years.

More than three-quarters (78%) of respondents said they are concerned about the impact of deepfake technology on voice biometrics and facial ID, authentication methods financial institutions already use for call-center verification and mobile app sign-in. Within that group, 27% said these authentication methods are “not entirely secure,” 6% said they are already “insecure,” and 45% said they could come “under future threat.”

More than half of respondents (52%) said they had not been provided with, or could not recall being offered, any information or guidance by their financial institution about the deepfake threat and how to reduce the risk. That figure rises to 60% among respondents aged 55-65, compared with 48% among those aged 25-35.

Even so, most respondents remain somewhat confident (52%) or very confident (33%) that their primary financial institution will protect them from payment fraud. Capco said the findings suggest the payments industry has an opportunity to strengthen AI-era fraud defenses and preserve trust as it prepares for a real-time payments environment.

The results appear in Capco’s new Canada Payment Fraud report, which comes as Canada prepares to introduce its Real-Time Rail (RTR), bringing instant account-to-account payments, and as fraudsters increasingly exploit advanced technologies, including AI, to increase the scale and sophistication of payment fraud. The RTR is being built by Payments Canada, which selected Interac in 2022 to deliver the interbank service using ISO 20022 messaging, and will give the country its own instant retail rail after a timeline that has slipped repeatedly since the project was first announced — even as other G20 markets, such as the United Kingdom with Faster Payments and the United States with FedNow, have deployed theirs. Because real-time payments settle within seconds, the report’s emphasis on AI-enabled real-time detection tools reflects the narrow window instant rails leave for stopping fraudulent transfers before funds move.

The report examines trends across five key types of fraud and outlines recommended ways for financial institutions to counter emerging threats. These include multilayered defenses, better coordination among internal teams, information sharing, detection gap analysis and AI-enabled real-time detection tools.

Gaelan Woolham, Partner and Canada Head of Financial Crime, Risk, Regulation & Finance at Capco, said: “Payment fraud has become increasingly globalized, industrialized and technology-enabled, making it one of the most significant challenges facing Canadian consumers and the country’s payments ecosystem. As Canada prepares for the launch of the RTR, fraud prevention will remain a top strategic priority across the industry. To stay ahead of evolving fraud tactics, organizations must be clear on emerging threats, customer concerns, experiences and expectations – and be ready to leverage advanced technologies, enterprise data and AI capabilities to prevent and respond to fraud in real time.”

Other key findings from Capco’s Canada Payment Fraud survey include:

• Security (60%) and advanced fraud protection (46%) are the most frequently cited important factors, with four selections permitted, when respondents choose a financial institution offering payment services.
• Other considerations include customer service quality and responsiveness (39%), transaction speed and reliability (36%), accessibility such as 24/7 support (36%), brand reputation (31%) and ease of user experience or convenience (29%).
• In addition to card or card data theft, identity theft and account takeover, other fraud types that concern Canadian consumers are purchase they did not make (38%), phishing (27%), transfer payments they did not make (24%) and impersonation or social engineering (17%).
• When balancing security and convenience, the largest share of respondents (40%) said security is their absolute priority.
• Another 31% said they put security first but also want decent levels of convenience, while 26% said they want to balance security and convenience.
• Only 4% said convenience comes first.
• Complex passwords are frustrating or inconvenient for 33% of respondents, while 27% said the same about receiving security codes, such as multi-factor authentication.
• Challenge or security questions are frustrating or inconvenient for 23% of respondents, and mobile or email notifications of account activity are frustrating or inconvenient for 17%.

Harley Wonder, Managing Principal, Canada Financial Crime, Risk, Regulation & Finance at Capco, said: “The latest AI technologies are already showing their value when it comes to improving detection rates, identifying risk signals across operational, functional and data silos, and enabling accelerated, near real-time prevention. In addition to deploying AI, institutions should reappraise all components of their fraud prevention strategy from customer onboarding and education to collections and disputes. Customer education, for example, must become more actionable and be brought closer to the potentially insecure activity using mechanisms such as just-in-time messaging.”