Finance & Banking , Fraud Management & Cybercrime , Fraud Risk Management

SIM Swapping and QR Code Scams Dominate APAC Fraud Landscape

Countries throughout APAC are rapidly expanding digital payment ecosystems and embracing digital change for greater convenience and financial inclusion. But the region has become a hotbed for fraudsters who are exploiting these same technologies.

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The rise in payment fraud is one of the top three fraud trends in APAC, according to a Forrester report. Crimes involving SIM swap fraud, QR code scams and fake payment apps have increased 15% over the past year, Forrester said. These tactics are defrauding people who can least afford it.

For example, in the Philippines, despite the heavy use of credit cards, both the banked and the underbanked increasingly rely on digital financial services, especially e-wallets, which are now widely accepted. E-wallets not only facilitate transactions but also play a critical role in the distribution of remittances by providing the last kilometer of high-volume, cross-border electronic money transfers. But faster payments processing is leading to higher rates of payment fraud.

Australia has experienced a massive rise in fraudulent chargebacks involving individuals who dishonestly dispute legitimate transactions to obtain a refund. Hong Kong and India are seeing growth in promotion fraud in which fraudsters are taking advantage of all types of promotions and rewards offered by retailers and financial institutions. In Singapore, impersonation scams and user-authorized fraud are on the rise as fraudsters manipulate consumers to transfer money.

QR code-based payment fraud is another growing trend in APAC. Meng Liu, senior analyst at Forrester, said many countries in APAC - including India, Singapore, Malaysia and the Philippines - have high penetration of QR code-based payments. “Fraudsters can replace authentic QR codes with fake ones, directing consumers to illegal websites or introducing malware,” Liu said.

QR code threats are greater in Asia than in markets in North America and Western Europe, "where card-based payments dominate and QR codes are less common," he said. APAC - particularly China, Japan and Korea - also has a high adoption rate for cryptocurrencies. Fraudsters exploit the anonymity of cryptocurrencies to conduct illicit transactions - a trend that is observable globally but more pronounced in APAC because of higher trading activities.

While new kinds of payment methods have emerged, APAC still has a sizeable population that uses credit cards to make their payments. The fragmented nature of the payment space in the region makes it more attractive for fraudsters.

According to the Forrester report, besides payment fraud, deepfake-enabled scams and advanced social engineering attacks are also surging in APAC. Fraudsters are using deepfake technology to create highly convincing fake audio and video content, which can be used to manipulate both individuals and organizations, making traditional verification methods increasingly obsolete. Social engineering has also evolved, and fraudsters are using sophisticated techniques that go beyond typical phishing scams. They now use detailed personal information to execute complex schemes such as pretexting and vishing, often augmented by deepfake elements to deceive their targets. These emerging fraud types put additional pressure on businesses to adopt more advanced AI-driven fraud detection and prevention strategies to stay ahead of evolving threats.

Regulatory Steps

The high volume of payment fraud across various countries in APAC has forced regulators to step up their game. Unlike in the U.K., where regulators place the responsibility on banks to reimburse customers for scam losses, APAC regulators are proactively phasing out payment methods with high fraud rates. The Monetary Authority of Singapore is mandating a shift from one-time passcodes to more secure authentication methods such as multifactor authentication. China has implemented a comprehensive approach involving various sectors to combat fraud, including collaboration with tech giants Tencent and Alibaba.

Australia has introduced a data-sharing consortium to enhance fraud detection, reflecting a holistic regulatory approach.

The Philippines' BSP is leading the region by requiring financial institutions to use real-time fraud monitoring and improve integration between fraud and AML systems.