Report of fraud rates by issuers and acquirers

For card-based transactions:  - When the issuer reports frauds under the EBA Guidelines on fraud reporting (EBA/GL/2018/05), shall the issuer provide information on the unauthorised transactions for which the acquirer has applied an exemption? If so, shall the issuer provide a break-down according to the different exemptions applied by the acquirer? - When the acquirer reports frauds under the EBA Guidelines on fraud reporting, shall the acquirer provide information on the unauthorised transactions for which the issuer has applied an exemption? If so, shall the acquirer provide a break-down according to the different exemptions applied by the issuer?

The Feedback Table annexed to the EBA Guidelines on fraud reporting reads: “[Question:] If a transaction where the payee’s PSP used the TRA exemption turns out to be fraudulent, the payer’s PSP should not count that transaction in its fraud levels. By the same token, it should be clarified that, if it is the payer’s PSP using the TRA exemption and the transaction turns out to be fraudulent, the payee’s PSP’s fraud levels should not be impacted. [Answer:] The EBA is of the view that all fraudulent transactions should be reported. Section 3.2 of the Final Report also clarifies that, in the case of transactions processed by more than one PSP (e.g. card transactions), the fraudulent transactions included in the calculation for a given PSP’s fraud rate should be based on (i) the unauthorised transactions for which the PSP has borne liability, as determined in accordance with Article 74 PSD2, and (ii) the fraudulent transactions that have not been prevented by the PSP.” (Question 209, page 140). Issuers are required to provide a break-down of the exemptions they apply (Sections 3.2.1.3.4-3.2.1.3.8 and 3.2.2.3.4-3.2.2.3.7 of the reporting form under Annex 2(C) of the EBA’s Guidelines). The Guidelines, however, do not clarify whether issuers shall only provide a break-down of the exemptions they apply or also a break-down of this information according to the different exemptions applied by the acquirer. Annex 2(C) does not contain a break-down of this information according to the different exemptions applied by the acquirer. Also acquirers are required to provide a break-down of the exemptions they apply (Sections 4.2.1.3.4-4.2.1.3.6 and 4.2.2.3.4- 4.2.2.3.6 of the reporting form under Annex 2(D) of the EBA’s Guidelines). The Guidelines, however, do not clarify whether acquirers shall only provide a break-down of the exemptions they apply or also a break-down of this information according to the different exemptions applied by the issuer. Annex 2(D) does not contain a break-down of this information according to the different exemptions applied by the issuer. In our view: - The issuer shall only report a break-down of the exemptions it has applied. It should not be required to provide also a break-down of the acquirers’ exemptions. This is upon each acquirer to do. - The acquirer shall only report a break-down of the exemptions it has applied. It should not be required to provide also a break-down of the issuers’ exemptions. This is upon each issuer to do, as the acquirer does not even have information on which exemption the issuer has applied. This is also confirmed by the fact that the reporting form under Annex 2(D) contains only information on exemptions that are available for acquirers and not on those exemptions that are available only for issuers (e.g., white-listing under Article 13 RTS). In other words, it is sufficient that issuers and acquirers provide a break-down of their fraud according to the exemptions they have respectively applied.