Carding as an Informal Economy: Contribution to GDP of the Shadow Sector (Macroeconomic Assessment of Scale and Impact)

[Professor]

Introduction: Shadow Digital Mining
Carding is traditionally viewed as a criminal offense, but from a macroeconomic perspective, it is a specific sector of the informal (shadow) economy. It produces goods (stolen data, money, physical goods) and services (dropping, cashing out, guarantees), has its own value chain and employment system, and redistributes financial resources globally. Estimating its "contribution" to shadow GDP is an attempt to measure the scale of digital piracy and its impact on the legal financial system.

Chapter 1: Methodological Problems of Estimating the "Shadow GDP" of Carding​

Direct calculation is impossible due to the hidden nature of the activity. Estimates are based on indirect data:

1. Conversely: Analysis of global economic losses from payment card fraud (data from Nilson Report, FICO). This is not the carders' income, but the total financial damage, including losses to banks, merchants, insurance companies, and consumers.
2. Shadow market analysis: Monitoring darknet forums to estimate prices for dumps, fulls, logs and their sales volumes (companies like Flashpoint, Intel 471).
3. Expert assessments and modeling: Extrapolation of data from solved cases to the overall picture (assessments by Group-IB, Positive Technologies, McAfee).
4. Cryptocurrency flow analysis: Tracking transactions from card-related wallets to crypto exchanges to estimate fiat conversion volumes.

The key problem: The gap between the damage (which can reach tens of billions of dollars) and the net profit of carders. A significant portion of the damage is absorbed by banks and insurance companies, not directly related to theft, but rather to security and system restoration costs.

Chapter 2: Sectoral structure of the "shadow GDP" of carding​

The conventional “GDP” of the industry can be broken down into several sectors:

1. Primary Sector:

• Products: Stolen card data (dumps, CVV, fulls), session logs.
• Added Value: The sale price on a darknet marketplace minus the costs of software and hacking infrastructure. Estimates place the price of a dump at $5-$100, and a full dump at $20-$500, depending on limits and country. With sales volumes in the hundreds of thousands of records per year, the segment's turnover can reach hundreds of millions of dollars.

2. Processing and manufacturing sector (Secondary Sector):

• Products: Ready-to-use tools: cloned physical cards, configured bots for receipts and purchases, phishing panels, custom Trojans.
• "Added value": Significantly higher. Software or a finished map are several times more expensive than raw data. This segment requires highly skilled "labor" and the industry's main "capital investment."

3. Logistics and services sector (Tertiary Sector) is the largest:

• Services:
  • Dropping and cashing out: Commission 10-50% of the amount.
  • Warranty services: Commission 5-15% of the transaction.
  • Infrastructure rental: Proxies, botnets, hosting for phishing.
  • Cryptocurrency laundering: Mixer, exchange, and OTC fees.
• "Added Value": This is where the bulk of money turnover is concentrated. It's the digital equivalent of the transportation network, retail, and financial sector of the shadow economy.

4. Consumption sector:

• Final goods: Electronics, luxury goods, jewelry purchased with stolen money and either consumed by the organizers or resold at a discount (usually 30-60% of retail).
• Effect on the legal economy: Part of this "demand" formally increases legal store sales, but is paid for with criminal funds, distorting the statistics.

Chapter 3: Estimated Scales and Multiplier Effects​

• A conservative estimate of the carding industry's annual global revenue (not losses!) is $1-3 billion. This sum ends up directly in the pockets of criminal groups after all expenses and commissions.
• The total global damage from all forms of payment card fraud was estimated at $32 billion+ in 2022 (Nilson Report) and continues to grow. Carding's share of this damage is significant, but not complete.
• Multiplier effect in the shadow economy: Every dollar received from carding creates 2-3 dollars of turnoverin related shadow sectors:
  1. Payments for server rental, VPN, software.
  2. Salaries for droppers, mules, technicians.
  3. Purchase of counterfeit documents, SIM cards.
  4. Investments in other types of crime (drug trafficking, arms trafficking).
  5. Legalization through businesses (restaurants, clubs, construction) – this is how carding “invests” in the legal economy, but with dirty money.

Regional distribution of "shadow GDP":

• CIS and Eastern Europe: Leaders in raw material extraction and software production (high added value).
• Southeast Asia and Africa: Leaders in logistics services and low-skilled labor (dropping).
• US/EU: The main market for raw materials and end-use goods, as well as a center for money laundering through crypto- and fiat-based schemes.

Chapter 4: Macroeconomic Impact: Distortions and Costs​

Carding doesn't just redistribute wealth; it creates significant negative externalities for the legal economy:

1. Security costs: Banks and retailers spend tens of billions of dollars annually on cybersecurity, fraud insurance, and monitoring systems. These costs are included in the price of their services, driving up fees and prices for all legitimate consumers. This is a hidden tax on society that carding imposes on the global economy.
2. Distortion of the labor market: Carding creates an alternative labor market for IT specialists, offering quick money outside the legal framework. This can siphon talent from legitimate sectors (development, cybersecurity) into criminal ones, especially in regions with low legal salaries.
3. Stimulating inflation in luxury goods: The mass purchase of luxury goods with stolen money and their subsequent resale at a discount creates artificial demand and can influence prices on the secondary market, as well as encourage money laundering through luxury goods.
4. Undermining trust in financial institutions: The indirect costs of declining trust in online payments and banks are difficult to measure, but they lead to a slowdown in the digitalization of the economy and an increase in the cost of servicing cash transactions.
5. Fiscal losses: Revenue from carding is not taxed. Governments lose tax revenue on these amounts and are forced to spend significant resources on investigations and judicial systems.

Chapter 5: Why is this "economy" sustainable? Growth factors​

1. High profitability: With minimal production costs (computer, internet), profitability can reach hundreds and thousands of percent.
2. Globalization and digitalization: The expansion of contactless payments and e-commerce is constantly expanding the "raw material base."
3. Technological advances: Cryptocurrency, Telegram, and cloud services have lowered barriers to entry and simplified logistics.
4. Regulatory arbitrage: Carders exploit jurisdictional inconsistencies and weak enforcement in individual countries.
5. Socioeconomic background: In regions with high inequality and youth unemployment, carding becomes a “job.”

Conclusion: The Parasitic Symbiotic System
Carding as an informal economy is a parasitic but deeply embedded system in the body of global financial capitalism.

• It parasitizes on its infrastructure (payment networks, the Internet, logistics) and stimulates the growth of security costs.
• It is symbioticin the sense that:
  • Stimulates technological development in the field of cybersecurity.
  • Absorbs surplus IT personnel in regions with limited legal opportunities.
  • It performs the function of shadow redistribution of wealth, albeit through criminal and unfair means.

Its notional "contribution" to shadow GDP reflects the vulnerabilities and contradictions of the legal economy: digital inequality, regulatory gaps, and social exclusion. As long as these conditions persist, carding will remain a stable and growing "industry" of the global shadow economy, whose turnover is likely to continue to grow, outpacing the GDP of many small, legal states. Combating it is not only a police task but also a macroeconomic challenge, requiring the elimination of the very foundations upon which this digital shadow economy thrives.