Retailers are benefiting from the introduction on Chip and Pin cards, with the new system cutting fraud by 13 per cent, according to the Association of Payment Clearing Services (APACS).
The group said that losses due to the fraudulent use of credit and debit cards fell last year by £65m to £439m.
Most categories of fraudulent card use dropped, except for transactions over the phone, internet or by mail.
The Chip and Pin system was phased in from 2004, with their use becoming required in retailers from February this year.
Sandra Quinn of APACS said: "Seeing card fraud losses come down is cast-iron proof that Chip and Pin is doing its job.
"Back in 2002 we forecast that fraud would have risen to £800m in 2005 if we didn't make the move to Chip and Pin so it's heartening to see total losses well beneath this figure" she added.
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