What The Nilson Report Tells Us About the Health Of Payments Systems In The World…
10 April 2026
01
NILSON REPORT DATA...
A careful reading of the authoritative Nilson Report discloses several telling insights exposed by especially the explosive success of ‘open payments networks’… It is generally taken for granted - purely as an unexamined assumption - that “more KYC leads to more trust that leads to less fraud” However, Nilson data paints a very different picture… While consumers are increasingly being burdened with ‘KYC bloat’ - usernames, login names, passwords, secret answers, biometrics, 2FA/MFAs, CAPTCHAs, device binding… Nilson estimates that global card fraud losses alone nevertheless range somewhere between $28-30 billion annually, projected to exceed $40 billion over the next few years This suggests something really interesting: fraud scales with transaction volumes - fraud is not inversely affected with identification controls In other words… KYC does not eliminate fraud - it merely succeeds in taxing legitimate users while fraud persists
02
THE INCONVENIENT TRUTH...
The inconvenient truth is this: the system is just not winning its battle against fraud - instead, it merely succeeds in socialising its cost across all consumers Some industry actors boast that “the rate of fraud (bps) is stabilising” or even “improving”, while absolute levels of fraud continue to rise materially - please tell that to Portia Mngomezulu - a client of MTN (South Africa) who recently lost approximately R94,000 after fraudsters executed a SIM swap, intercepted her OTPs and emptied her bank account - rather than confronting absolute losses, they (disingenuously) hide behind rates The system did not fail because of insufficient identification - it failed because identification cannot establish identity
03
IDENTIFICATION vs IDENTITY...
All KYC measures merely attempt to confirm a claim to identity - they do not (and cannot) prove identity As this one example (and it is not an edge case) demonstrates, it is not because the victim failed the system - she dutifully complied with every KYC demand imposed upon her by MTN - rather, the system failed her… The conclusion that is necessarily inferred from the Nilson Report data, is this - the payments industry has optimised everything… except the one thing that matters: knowing who the actually person is QiD solves the problem of identity theft/fraud by neuromorphically grounding identity, not in any form of user attestation or feature vector or derived biometric representation, but in the unique distinctiveness of the person behind the interaction instead
