(Yicai) Jan. 13 -- Some smaller Chinese banks have reportedly shut down their cross-border transaction function after many fraud cases were registered around the New Year holiday.

In addition to assisting credit and debit card holders in locking and reporting fraud or the loss of their cards, small- and medium-sized lenders in Guangdong, Jilin, Hebei, Hubei, and Hunan provinces disabled their cross-border transaction functions to ensure the safety of clients, Securities Times reported today.

These moves can temporarily reduce the security risk to customer funds, industry insiders believe. But in the long run, banks still need to make fundamental optimizations in customer segmentation, risk control system construction, and transaction system upgrades.

A Shenzhen resident surnamed Lin, who traveled to Japan during the New Year holiday, said she received an overseas payment notification from her credit card during the night, after she came back to China. Luckily, she had activated the overseas payment lock function upon her return, so the transaction was canceled.

Many others were not as lucky as Lin, as they did not turn on the overseas payment lock function and lost up to tens of thousands of Chinese yuan, equal to thousands of US dollars, in fraudulent transactions.

Lin’s debit card was also subject to multiple unauthorized transactions in December, resulting in a cumulative loss of over CNY10,000 (USD1,430). She reported the case to the police.

There are multiple reasons why credit and debit card fraud is common overseas, said Wang Pengbo, chief financial analyst at Broadcom Consulting. First, the information security protection levels of overseas merchants and payment institutions vary greatly, making it easy for sensitive card information to be stolen.

Second, some small- and medium-sized banks have insufficient cross-border risk control and early warning and disposal capabilities, which can easily lead to blind spots in monitoring. And finally, some cardholders have weak awareness of card security overseas, swiping cards at non-official merchants, and casually revealing card information.

Editor: Futura Costaglione