An Introduction to Carding and Its Relation to Cyber Insurance
Carding is a form of cyber fraud in which criminals use stolen credit card information to conduct illegal transactions, test the validity of cards, or resell them on the black market. This is not a new threat — it has existed since the 1990s — but in 2025, it has evolved under the influence of technologies such as artificial intelligence (AI), cryptocurrency, and mobile payments. For educational purposes, it is important to understand that carding not only causes direct financial harm to victims (consumers and businesses) but also creates systemic risks for the economy, including the cyber insurance market. Cyber insurance is a specialized type of insurance that covers losses from cyberattacks, including data recovery, legal costs, and customer compensation. In 2025, carding is driving demand for such policies as it is one of the most common types of cybercrime, leading to increased claims and risk redistribution.In this article, we will examine the carding mechanism, its trends in 2025, its impact on the cyber insurance market, challenges for insurers, and recommendations for risk mitigation. The goal is to provide an educational overview so readers can better understand how personal and corporate actions impact global cybersecurity.
What is Carding: An Educational Analysis
To understand the impact of carding, let's start with the basics. Carding is a multi-step process:- Data Harvesting: Attackers steal credit card information through:
- Skimming: Installing devices on ATMs or POS terminals to read magnetic stripes. The card skimming market is estimated to be $4.01 billion in 2025, growing 12.7% compared to 2024, due to the transition to chip cards and online skimming.
- Phishing and Malware: Phishing emails or malware that steal data from devices, for example, through infected websites or apps.
- Data Breaches: Massive leaks from company databases (for example, 5.5 billion accounts will be compromised in 2024, which directly fuels carding).
- Card Testing (or Carding Attacks): Fraudsters conduct small transactions (e.g., $1) on legitimate websites to verify the card's validity. This is a "silent" attack that can lead to card blocking but often goes undetected.
- Monetization:
- Purchasing goods for resale (e.g. electronics on Amazon).
- Selling "dumps" (data packages) on the darknet for between $5 and $50 per card.
- Integration with other schemes such as money mule (using intermediaries for laundering).
Educational fact: Carding is classified as "card-not-present" (CNP) fraud when the card is not physically presented, which is the majority of cases in online commerce. In 2025, CNP will remain the dominant trend due to the growth of e-commerce.
Carding Trends in 2025: Statistics and Evolution
In 2025, carding remains a viable option, despite security improvements (such as EMV chips and 3D Secure). Instead, it adapts:- Loss statistics: More than 151,000 cases of credit fraud were reported in the first quarter of 2025, a 24% increase compared to the previous quarter. Total global losses from credit card fraud are projected to reach $43 billion by 2026, peaking in 2025. Identity theft, often associated with carding, reached 365,000 cases in Q1 2025.
- The role of AI and new technologies: Attackers are using AI to automate card testing and bypass anti-fraud systems. For example, generative AI creates fake accounts for phishing. Integration with cryptocurrencies for anonymous transactions is also growing.
- Geographic and sector trends: North America leads in losses (69% of the cyber insurance market), but Asia is experiencing rapid growth in attacks. Small and medium-sized businesses (SMBs) are vulnerable: 72% of attacks target large companies, but SMBs suffer from a lack of protection.
| Trend | Description | Statistics 2025 |
|---|---|---|
| CNP Fraud | Fraud without a physical card | The main type, growth of 15-20% due to online shopping. |
| AI-enhanced attacks | Automation of carding | Increase in complaint frequency by 10-15%. |
| Deepfakes и BEC | The Business Email Carding Tradeoff | 23% increase in the severity of claims. |
| Check Fraud | Hybrid with carding | Part of the general trends, with a focus on ACH. |
Educational Insight: Carding is a "Fraud as a Service" (FaaS) where beginners can buy ready-made tools on forums, which democratizes crime and increases the volume of attacks.
The Impact of Carding on the Cyber Insurance Market in 2025
Carding directly drives growth in the cyber insurance market, as it increases the frequency and severity of incidents. Here's a detailed analysis:- Market and premium growth:
- The global cyber insurance market is expected to reach $16.3-22.5 billion in 2025, with a forecast of $29 billion by 2027, driven by threats like carding and ransomware. Growth is expected to be 10-15% annually, with North America leading the way ($10.6 billion in premiums in 2024).
- Premiums for businesses are growing by 7-15%, but in Europe and Latin America they are declining (by 15-17%) due to market stabilization. For individuals, the monthly premium is $25-100.
- Increase in claims:
- Carding leads to identity theft claims and financial losses. The average cost of a data breach is $4.88 million (a 10% increase since 2024), including "shadow data." In 71% of cases, breach coverage amounts to 44% of insurer payments.
- Overall cybercrime complaints are stable (~700 in 2025), but with a seasonal peak at the end of the year. Ransomware has stabilized, but fraud (including carding) is on the rise.
- Policy changes:
- Insurers are tightening their underwriting: They require MFA, monitoring, and security evidence to mitigate risks. New products, like aiSure™, cover AI attacks.
- The "cyber gap" (uninsured risks) is high among SMBs, which is exacerbated by carding.
Educational fact: Cyber insurance works like a "safety net": It covers first-party losses (the company's own losses) and third-party claims (customer claims). Carding often triggers both, raising the total cost to the economy to $10.5 trillion by 2025.
Market Challenges in 2025
- Growing risks: API vulnerabilities and deepfakes are increasing carding, leading to new waves of attacks. 37% of underwriters expect increased risks.
- Competition and pricing: The market is buyer-friendly, with premiums falling, but this may lead to underpricing risks.
- Regulatory changes: Strict laws (such as GDPR in the EU) increase demand but make claims more difficult.
Recommendations: How to minimize risks
For education: Prevention is key. For businesses: Implement anti-fraud systems, MFA, and employee training. For consumers: Use virtual cards, monitor transactions. For insurers: Partner with cybersecurity firms to reduce losses.In conclusion, carding in 2025 accelerates the transformation of cyber insurance into a more mature market, but requires a collective effort to mitigate threats.