5 ms·

Payments fraud is, and I mean this literally, not on the scale of a gold mine. It is on the scale of gold mining, as an industry. "That sounds like a very hand

Payments fraud is, and I mean this literally, not on the scale of a gold mine. It is on the scale of gold mining, as an industry. "That sounds like a very hand-wavy claim, Patrick." U.S. gold mine production in 2020: ~200 metric tons, which is about 6.4M troy ounces. $1.8k an ounce currently. That's +/- $11B. Payment fraud worldwide is +/- $25B and the US has the plurality of it.

estaseuropano 5y ago
But as for much crime the payoff might not be as high as the damage.
kragen 5y ago
94% of gold mining is outside the US (because mining is hard, dangerous work, because it's often environmentally devastating, and because the US industrialized early and so has depleted its natural resources), so US gold mine production is not very relevant. Worldwide gold mining is about 3200 tonnes per year, so about US$190 billion. I guess you could say that US$25B is on the scale of US$190B, since it's smaller by less than an order of magnitude? But the person you were replying to wasn't saying that payments fraud wasn't huge. They were saying that the bulk of payments fraud was no longer stolen credit cards, because now payments fraud happens mostly with cryptocurrencies. I have no idea if their point is correct, but I think you weren't really addressing it.
elteto 5y ago
Great post! As always. You mention that there aren’t many good books about this topic. You should fix that! ;)
- patio11 5y ago
  If only there were a publishing house that cared an irrational amount about financial infrastructure, but where would one ever find that? (No seriously speaking, would love to write a book someday, but not sure it would be this book, and between the day job and two young children I don't have a book in me at the moment unless I can clean the calendar for many months in a row and that doesn't seem rational given other uses of my calendar.)
  - jkaptur 5y ago
    For those not in the know, I think "where would one ever find that" is a joke about https://press.stripe.com/ https://press.stripe.com/
    - deleted 5y ago
      [deleted]
  - caseysoftware 5y ago
    Patrick, if you ever want to scheme on that one, let me know. I know a bit about the fraud, identity, and overall security side of things. ;)
thaumasiotes 5y ago
> and the US has the plurality of it. What does this mean? Are we breaking payments fraud down by countries? Continents? Currencies? Those can all have different "pluralities". There is no lower limit on what "the plurality of $25B" is.
- perl4ever 5y ago
  The US usually gets attributed something like 40-60% of the value of global capital markets, so it seems to me a reasonable default assumption that it has a similar ratio of payments fraud, or illegal drugs, or whatever economic sector you might choose. Very likely a plurality, very possibly not a majority.
- patio11 5y ago
  There is no way to conveniently do "select sum(payment_amount) where country = 'US' AND was_fraudy from the_global_economy" but it's broadly estimated at +/- $10B, which is why why I said it was on the scale the gold mining industry, which I quoted. You're welcome to Google various estimates, though they'll end up over the map in the low 10 digits region.

estaseuropano 5y ago

But as for much crime the payoff might not be as high as the damage.

kragen 5y ago

94% of gold mining is outside the US (because mining is hard, dangerous work, because it's often environmentally devastating, and because the US industrialized early and so has depleted its natural resources), so US gold mine production is not very relevant. Worldwide gold mining is about 3200 tonnes per year, so about US$190 billion. I guess you could say that US$25B is on the scale of US$190B, since it's smaller by less than an order of magnitude? But the person you were replying to wasn't saying that payments fraud wasn't huge. They were saying that the bulk of payments fraud was no longer stolen credit cards, because now payments fraud happens mostly with cryptocurrencies. I have no idea if their point is correct, but I think you weren't really addressing it.

elteto 5y ago

Great post! As always. You mention that there aren’t many good books about this topic. You should fix that! ;)

patio11 5y ago
If only there were a publishing house that cared an irrational amount about financial infrastructure, but where would one ever find that? (No seriously speaking, would love to write a book someday, but not sure it would be this book, and between the day job and two young children I don't have a book in me at the moment unless I can clean the calendar for many months in a row and that doesn't seem rational given other uses of my calendar.)
- jkaptur 5y ago
  For those not in the know, I think "where would one ever find that" is a joke about https://press.stripe.com/ https://press.stripe.com/
  - deleted 5y ago
    [deleted]
- caseysoftware 5y ago
  Patrick, if you ever want to scheme on that one, let me know. I know a bit about the fraud, identity, and overall security side of things. ;)

thaumasiotes 5y ago

> and the US has the plurality of it. What does this mean? Are we breaking payments fraud down by countries? Continents? Currencies? Those can all have different "pluralities". There is no lower limit on what "the plurality of $25B" is.

perl4ever 5y ago
The US usually gets attributed something like 40-60% of the value of global capital markets, so it seems to me a reasonable default assumption that it has a similar ratio of payments fraud, or illegal drugs, or whatever economic sector you might choose. Very likely a plurality, very possibly not a majority.
patio11 5y ago
There is no way to conveniently do "select sum(payment_amount) where country = 'US' AND was_fraudy from the_global_economy" but it's broadly estimated at +/- $10B, which is why why I said it was on the scale the gold mining industry, which I quoted. You're welcome to Google various estimates, though they'll end up over the map in the low 10 digits region.