I CONGRATULATE the Association of Banks in Singapore (ABS) in realigning the liability cap on credit cards with international practice. From Nov 1, cardholders will be liable to a $100 limit.

However, I disagree with Dr Harry Koh's view yesterday ('Do banks have the ammo to fight fraud?'), which assumed that fraud cases would increase.

In particular, his reasoning that cardholders will try to cheat banks by claiming card loss after going on a shopping spree has little merit. Singaporeans are generally honest and careful with their credit card usage and safekeeping.

According to the Nilson Report in March this year, Visa leads global transactions in hundreds of billions of US dollars with 60.25 per cent, while MasterCard has 28.4 per cent and American Express, 10 per cent. Stolen card frauds worldwide are about 7 per cent of total transactions.

According to ABS, the incidence of credit card fraud in Singapore is lower than a few years ago. It is among the lowest in the world, with card fraud rate at 0.02 per cent. So, why does Dr Koh think banks need more ammunition to fight fraud or that more people will shop and charge before reporting card loss?

For sound commercial reasons, it is the prerogative of banks to absorb the responsibility of merchants as they bring in businesses. There may be additional security measures to be introduced later. I am sure ABS values its 6.28 million cardholders here, and is satisfied with payments of $30 billion a year in transactions.

I applaud ABS's move to cap the liability of cardholders at $100, in appreciation of their collective responsibility in safekeeping their cards. Dr Koh's call for 10 per cent liability of costs incurred by lost cards is barking up the wrong tree. Perhaps the call would be more meaningful if directed by ABS at merchants.

Paul Chan

This article was first published in The Straits Times.