Mobile Wallet Comparision by Mckinsey

Topmost Challenges in Payments

Greater payments visibility 

The siloed systems that handle multiple payment types deprive banks of the holistic visibility they want across the full environment.

Many institutions lack reporting and analytics that would enable them to spot trends, better manage liquidity and risk, and pinpoint anomalies amid vast transaction volumes. Banks face new payments challenges in a fast-changing industry Poor visibility is not just an internal liability.

It also means that banks are hard-pressed to satisfy customer demand for real-time transparency into payment status, particularly across a wide range of payment types, and risk a competitive disadvantage that can drive churn and revenue loss to more advanced rivals.

Increased operational efficiency

Banks pay a high price in operational inefficiencies in managing fragmented payments environments. Duplication of data and effort across systems is not uncommon, driving up administrative costs and introducing the risk of discrepancies in information.

The IT resource requirements to maintain and evolve a sprawling payments infrastructure are also high. Dozens of technical interfaces, transactions, database schema message types, and standards such as ISO 20022, SWIFT and ACH are costly and time consuming to maintain update.

Many custom integrations developed over many years are critical to operational integrity, yet are often poorly documented and difficult to manage when the individuals who developed them move to another role or company.

Improved compliance and risk management 

The limited visibility in siloed legacy payments systems also compromises a bank’s ability to maintain regulatory compliance and to effectively manage risk. Financial institutions devote substantial resources to document information to comply with anti-money laundering (AML), FATCA, Dodd-Frank, SEC, Basel III and a host of other ever-changing requirements.

Payments infrastructure consolidation can significantly ease the compliance burden and improve confidence in regulatory reporting. Similarly, internal risk management is complicated by the sheer volume and speed of payments data across heterogeneous systems.

As the financial services world evolves towards real-time or faster payments processing, the importance of greater transparency to track and assess risk is magnified.

Readiness for real-time payments 

In the U.S. and other nations, Banking needs to prepare for the adoption of real-time payments.
The U.S. is well behind other nations in payments speed, including the U.K., Japan and Singapore.

Yet driven by business and consumer expectations for immediacy and strongly advocated
by the U.S. Federal Reserve, NACHA and the Clearing House, real-time payments in the U.S. and elsewhere are becoming more a question of when, not if.

Banks in the U.S. and other nations are understandably apprehensive about the transition.
The consultancy McKinsey estimates the cost of supporting real-time payments in the U.S. is between $4 billion and $7 billion, including the cost of adapting legacy systems and introducing new technology to facilitate the change.

As it is, payments infrastructure generally lacks the flexibility to accommodate such a large-scale change, and makes it difficult for banks to take advantage of opportunities to deliver innovative products and services oriented around real-time payments.

Blockchain : OPEN LEDGER FRAMEWORK

Linux Foundation, has started a OPEN LEDGER FRAMEWORK project to support Blockchain with enterprise grade functionalities.

Blockchain has the potential to transform how business is done, providing a new streamlined way to create an official record of transactions without going through a central point of control. 

The possible uses can vary from verifying payments and contracts to validating stock trades and marriage licenses.

Blockchain got its start several years ago as a key ingredient of Bitcoin, the crypto currency, but, it turns out, the technology can make a difference whenever valuable assets are transferred from one party to another.

Why does most of the Banks/FIs need Transformation in their payment systems?

7 habits of highly successful digital bank

The 7 habits of highly successful digital bank are:

1. Be customer centric
2. Eliminate silos
3. Be a challenger
4. Embrace cooperation and coopetition
5. Work with Fintech startups (or buy them)
6. Build an open IT architecture
7. Strive for a faster innovation planning cycle

1. Be Customer Centric

This may sound obvious but: a) it is not always true for a traditional incumbent; b) it carries along some key components that are often under evaluated. Being customer centric means that you:

– Change your mindset. You need to build a digital, customer-oriented culture inside the bank. Not just profits, but profits as a result of a successfully differentiated and long term sustainable customer strategy. Marketing is not just about spending, but should relate back to its original ‘go-to-market’ meaning.

Being ‘digital’ is not just something trending, but is going to be forever and a core part of the organization. Implementations should not be a second level job execution, but must be smart, agile, smooth and consumer-oriented and designed. Start thinking about the right organization structure and interactions, with the right people to digitally lead the change with customers in mind. Find the right skills.

– Reengineer your business to consumer processes. Start with the end in mind, using overall customer experience you want to achieve as opposed to starting from a legal and regulatory constraint perspective. This may sound impossible in an over-regulated industry, but if someone tells you “this is impossible to do,” you can always find a way.

In addition, you should inject a “Yes we can” culture. Engage your legal, compliance and risk managers upfront in the process and product design, making them work with others on the team toward the solution. They will become part of the solution instead of a hurdle.

– Win customer preference. Do not start with market share or business objectives. Start with how to get the customer preference you need in order to achieve your business objectives, and make the objectives compatible. Competition will only become more intense going forward, so don’t forget your brand image and values.

Trust is key in financial services, and trust is determined first of all by reputation (brand image and customer experience) that is becoming more and more digitized. Improving your reputation and satisfaction scores will bring you additional clients at lower costs. It is not enough to say that your bank is ‘solid’ or ‘local’, or ‘global’. You need to work on your brand strategy to attract customers. This has to be part of your competitive advantage.

2. Eliminate Silos

This is organizationally key for a digital bank. This is not just important from the legal or risk perspective. This must be extended to the whole organization. Some keys to eliminating silos:

– Eliminate staff and business departments. From the most obscure back office department to state of the art front office deployment, it is important to deploy agile across functional teams. Cross fertilization and mutual understanding of the agile concept will help to achieve your business goals.

– Build objectives and incentives from a multichannel customer perspective. Find a way to align objectives across channels and neutralize organizationally driven internal competition. Break the conflicts.

– Make IT the center of your strategy. Put your COO and CIO at the heart of your business, working alongside finance, marketing, etc. Since IT organizations are usually built in silos, break these silos – making them work agile – in teams. Make sure innovation teams are not logistically miles away from who runs the daily business.

3. Be a Challenger

Challenge your own business model and your traditional way of working. Firms that failed to challenge their incumbent businesses include Kodak, Blockbuster, Nokia, Blackberry and many others. Incumbent managers and organizations tend to defend their own profit sources, and their well-proven (in the past) business models.

Financial service barriers to entry are falling and newcomers are already making inroads, encroaching on traditional lines of business. While the size of newcomers may look small and banking may still feel safe, you need a long term competitive perspective. This is a business revolution not just a technological evolution.

It is time to start thinking about ways to evolve your business model … speeding up innovation and behaving like a new entrants. If you were a FinTech how would you behave? What business model would you build to destroy an incumbent? How would you attack the most profitable sources of your business. Use a challenger mindset if you want to survive in the long term.

4. Embrace Cooperation and Coopetition

It is time for a complete rethinking of the banking business model, IT architecture and systems, since digital banks will mainly serve as IT companies dealing with customers’ money in the future. Banks will need to be much more open and ready culturally and infrastructurally to share business, clients platforms and solutions with external partners.

The time where banks could run their business in isolation, with very little sharing of cross-industry platforms is over. Banking is under a massive attack from internet giants and legacy-free Fintech startups, creating the need for systematic cross-industry alternative digital solutions.

One very good example of how the banking future should be reshaped is given by the UK-based Paym P2P payment network. Forced by the Payments Council, it has reached a coverage of 9 out of 10 current accounts and processed nearly £44 million in less than one year. As a result, banks and building societies in the UK have been able to work together to develop a new fast payment solution that will make the life harder for new entrants.

This is the new way forward. Building new digital common platforms, with competition based on customer preferences around branding, customer experience, value propositions and add-on value propositions. This is what is happening in the auto industry and will eventually happen in banking.

5. Work with Fintech Start-Ups

Incumbent banking organizations need to streamline their operations and narrow business and product development focus. They can’t be all things for all people, but instead, need to cut oversized operating and distribution costs.

There will continue to be smarter and faster players in a better position to deliver state of the art vertical solutions and user experiences … eating away at the edges of incumbent organizations. With regard Fintech start-ups, it may be better to partner than to compete. In other words, part of the product/service development of a successful digital bank should be outsourced.

As with many of the 7 habits, this is a complete change of mindset. It is not just about setting up an incubator or even a $100m VC fund. It is about integrating third party customer solutions into your offering. Or, if you want and can, it is about buying them entirely and having their solution as a key part of your own business proposition. An example of such a partnership in the U.S. and overseas is with Apple Pay.

6. Build An Open IT Architecture

If you want to build your competitiveness on agile web-scale innovation and open up your offering to partners and third parties, you need to completely rethink your IT architecture. Openness is the key word – you need an open programmable, agile architecture.

You need an API-centric platform capable to deliver:

• Consistent omnichannel experiences
• Dialogue in a plug and play scalable manner with third parties software solutions
• Hosting for new outsourced marketplaces
• A new digital CRM that will enable you to interact and learn in real time with your customers

7. Strive For a Faster Innovation Planning Cycle

The seven habits book ends with a discussion around the capacity to continuously improve, balancing and renewing resources for long-term well being. Successful banks in the digital word need to do the same … striving for continuous improvement and renewal. In order to do so, organizations need to get much much faster in the way they learn, act and react.

Many recent presentations by large banks show their new innovation labs, teams and work-plans. While impressive few are producing game changing innovations … quickly. The standard approach to innovation continues to include internal debates, committees, small pilots, more committees and so on.

Using traditional new product development and approval processes is a non-starter in the new digital world. The innovation planning cycle is far too slow for today’s high speed digital banking environment.

Today’s big digital players in other industries test and learn as part of an iterative process. They are not afraid of renewal and failure in doing so. They are agile and experiment in real time with their own customer base. The decision making process is much faster and the roll-out is fast … very fast.

There is one fantastic sentence from Jacques Séguéla, the famous advertising man behind François Mitterrand’s successful electoral campaign in 1981. In one of his books, when talking about market research, Seguela wrote: “less tests, more testicles”

Payments Trends and Buzzwords of 2016

3 topics/trends rose to the top:

 

•  Mobile wallets
•  Pay trend Real time payment initiatives in the US
•  US’s long awaited toe in the water with EMV or as so many wrongly call it today, Chip & Pin. 

 Buzzwords of 2016

 Wearables – and I am not talking about fitbits and Apple Watches. Wearables are going to have a new family member join the fray, Virtual Reality headsets. Samsung made a move to bring Oculus Rift to the masses with Samsung Gear VR. In a replay of everything that Samsung and Android have gotten to market with first, VR could be the one that they keep attention and market share away from Apple, only 2016 and beyond will tell.

Biometrics – we saw biometrics slowly and discreetly enter the payments arena with Apple’s Touch ID or Samsung’s Fingerprint Scanner. Whether to unlock your bank’s mobile application or pay for goods at the POS, fingerprint scanning was the first step into using biometrics to authenticate a user. Look for facial recognition to be the next big piece, say it with me… Pay by selfie!

BankingAPIs – with PSD2 around the corner (and across the pond), the fight for opening up banking APIs to third parties will come home to roost; you saw the initial battle lines drawn this past week from both Chase and Bank of America (with likely more to follow) in terms of dealing with account aggregation sites and sharing customer data. I think this is going to be a hot topic as the year kicks off and likely stay at a rolling boil throughout the year

 

Anatomy of a PAN

Future of Bitcoins

There are several interesting observations to be made about bitcoins.

Reduction in the Number of Miners

As the bitcoin reward diminishes over the next few years and the difficulty level is raised, it is expected that miners will start to drop out of the network. This means that the difficulty level will eventually go down unless the increase in per-miner compute capacity increases.

Value of a Bitcoin

There is a limit to the number of bitcoins that will be generated, currently estimated at 21 million bitcoins. At $1,000 per bitcoin, this is a total value of USD 21 billion dollars. This amount is trivial compared to the total currency value of most nations. If bitcoins really take off, there will be millions of participants worldwide. Twenty-one billion dollars is not nearly enough to handle the level of transactions that this group will generate. Therefore, many predict that the value of bitcoins will increase by a large factor. Of course, if bitcoins don’t make it into the mainstream, they may ultimately be worth nothing.

Transaction Rate

Currently, the bitcoin transaction rate is limited to one block every ten minutes. At an average of 400 transactions per block, this is a rate of 40 transactions per minute. This pales in comparison to the thousands of transactions per second that Visa and other payment processors handle. It is not clear how bitcoins is going to modify its algorithms to handle a transaction rate that is orders of magnitude greater than the current limit.

Higher transaction rates can be handled, for instance, by increasing the block generation rate. To be able to handle ten thousand transactions per second, the block generation rate would have to be increased from one block every ten minutes to 25 blocks per second.

BIT Coin - Infrastructure Continues...

The Block Chain

Its Bitcoin's general ledger.

The block chain is a linked series of transaction blocks that hold every bitcoin transaction made since the currency’s introduction in 2009. Each block is protected by a hash value to prevent it from being subsequently modified. Furthermore, the hash for each block includes the hash of the previous block. This guarantees the proper ordering of blocks.

Including the hash from the previous block has an additional advantage. The older a block becomes, the more likely that it is secure, since a hacker would have to modify all subsequent blocks in order for the block chain to remain viable.

Bitcoin and their Infrastrcuture

Bitcoins is a digital currency that made its debut in 2009. We described in some detail how bitcoins work in our earlier article entitled “Mt. Gox, Largest Bitcoin Exchange, Goes Belly Up.”1
Bitcoin mining is the way in which new bitcoins are minted (digitally, that is).


Mining involves packaging bitcoin transactions into blocks and appending them to the bitcoin block chain that records every bitcoin transaction. For each block that a miner adds to the block chain, he is rewarded with 25 bitcoins. At today’s price of about $600 USD, this amounts to $15,000. Sounds like a fast way to make a lot of money.

The backup service iDrive decided to try its hand at bitcoin mining. iDrive backs up its customers’ files overnight, which leaves most of its 3,000 quad-core servers idle during the day. It put 600 of its servers to work during the day mining bitcoins. After a bit of experience, it calculated that it would earn around 0.4 of a bitcoin per year – about $240.

The Bitcoin Infrastructure

How can mining for bitcoins be so difficult? The answer is that the algorithm for creating a legitimate block of transactions is very difficult to calculate, and its difficulty is raised as time goes on. To understand this, we must first understand a bit about the structure of the bitcoin network.

The Bitcoin Peer-to-Peer Network

The bitcoin infrastructure comprises a large number of peer-to-peer nodes worldwide that cooperate to manage bitcoins. Every bitcoin transaction is sent to each node in the network. Available to each node is the bitcoin block chain, a sequence of blocks that contains every bitcoin transaction that ever occurred since bitcoins were introduced in 2009.

Some of these nodes are mining nodes run by miners. Their job is to package a set of transactions into a block and append them to the block chain. For this effort, they receive as compensation some bitcoins as well as any transaction fees offered by the parties to the transaction.

A miner may be an individual, an organization, or a group of participants that form a mining pool and share the profits based on their relative contribution of processing power to the pool

Cloud Based Transaction Switch - From Omni payments

Card Data Risks in the Merchant Eco System

EKO Systems in Mobile Wallet Process

Mobile Wallet - General Architecture Overview

Evolution of Cards , Wallets and Mobile Payments

Control Points of Mobile Wallet

Selfie in Online Payments - By Mastercard

MasterCard is embarking on two pilots, one in the US and one in the Netherlands, which use facial recognition technology for payment verification.

The card giant is working with International Card Services (ICS) on a trial that will see 750 ABN Amro credit card users ditch passwords, PINs and confirmation codes and instead pay online through fingerprint and facial recognition.

Participants in the three month trial will download the MasterCard app from the Apple Store or Google Play and register on the ICS site to get a code emailed to them for activating online payments. Then, during checkout in a web store, the consumer will receive a pop-up on their mobile phone, through which they can authorise the payment via finger scan or selfie recognition.

Arjan Bol, country manager MasterCard Netherlands, says: "Biometrical technology has been developed to improve both speed and safety of online payments. This test will prove exactly that. And what is easier - and more fun - than paying through a selfie or fingerprint?"

Meanwhile, in what is claimed to be a US first, more than 200 of the credit union's employees will test the "selfie pay" system that will verifying their identities via facial photographs or fingerprint scans conducted on smartphones.

The closed environment pilot will see participants make virtual donations to the Children’s Miracle Network (CMN) Hospitals as First Tech bids to gauge whether biometrics could deliver greater security and convenience to customers.

Greg Mitchell, CEO, First Tech, says: "Our members are some of the most technologically focused consumers on the planet, and being an innovator in the payments security space is evidence of our strong desire to meet our members’ unique needs."

With the likes of Apple Pay raising awareness, MasterCard says that its research shows that three quarters of people have now heard of biometric payments. While fingerprint scanning is the most common form of biometric authentication, facial recognition is gaining some traction, with Wells Fargo trialling it for mobile corporate access and firms in Taiwan and China exploring its use at ATMs.

5 Types of Services of Mobile Wallet

The main types of mobile wallet services are:

1. Payments and cards: Card emulation for contactless cards (credit, debit, prepaid), e-payments-based services (remote payments) or peer-to-peer payments with or without a stored value account
2. Coupons and loyalty: Coupons, gift cards, loyalty programs or any other commerce-based service for discounts or rewards
3. Tickets and transport: Any form of tickets, boarding passes or check-ins for means of transport or for venues or events like cinemas, concerts and so forth
4. Access and keys: Any type of access or usage allowance, like keys for cars, buildings, private homes, hotel rooms and so on
5. Identity: Any type of personal identification, like passports, driving licenses, employee IDs and so forth

Putting these services into the mobile wallet can provide quite a lot of opportunities for service providers and users.

4 possible areas of content in a mobile wallet

Proximity mobile wallets VS Remote mobile wallets

Proximity mobile wallets

A proximity wallet (also called mobile wallet or NFC wallet) is used for authorization and transactions involving entities that are physically close to each other.

The core usage scenario is a proximity interaction between the mobile wallet and the control or acceptance entity. This concept is based on card emulation and provides a container where the card data is represented. Proximity wallets follow the underlying idea of digitizing the physical wallet, which I described in the series introduction, “What is a mobile wallet, and how does it work?”

Like a card, the digitized valuables contained in the proximity mobile wallet can be exposed to acceptance terminals or authorities for the control or exchange of secure information. For example, a mobile ticket is shown to the conductor or at the check-in gate, or a virtual credit card is held against a payment acceptance terminal.

You can distinguish between light proximity wallets that allow the storage of visual valuables (QR codes, textual codes, images of documents such as identity cards and so on) and full NFC proximity wallets that enable card emulation using secure elements and NFC interfaces.

Remote mobile wallets

In contrast to proximity wallets, with a remote wallet (also called mobile wallet, digital wallet, cloud wallet or e-wallet) the parties and entities involved in the authorization and transaction process (like payer and payee) are not physically close to each other. Hence the usage scenario is a remote authorization and transaction among the involved parties.

Remote mobile wallets are conceptually and historically closely linked to e-payments. They allow secure storage of payment data (“card-on-file”) and user identification information. A remote wallet is primarily used for payment transactions within e-commerce and m-commerce. It usually does not have a broad variety of services like a proximity wallet. It is rather more an aggregator to bundle various payment methods like credit cards, bank data for credit and direct debit transfers and so forth.
Usually, the sensitive data is stored remotely on cloud servers (thus the term cloud wallet).

Furthermore, remote wallets can be connected with loyalty programs or further value-added services. Many remote wallets are also equipped with a central stored-value account (SVA) that allows users to make or receive payments using the enabled payment methods.

Many remote wallets are designed and used as a distinct payment method that can be embedded in merchant websites or apps. This means that the payment data details of the underlying payment method and sensitive customer information can be hidden from payees like retailers and financial intermediaries. The best-known example for such a remote wallet is PayPal.

Remote mobile wallets have been established in the e-commerce market for years and are becoming increasingly important in the field of mobile commerce. Remote wallet concepts have also been applied for mobile payment solutions that are decoupled from bank accounts. Often referred to as “mobile money,” such approaches have been successfully established in developing countries to provide financial services like cashless payments and cash deposits to the unbanked. M-Pesa by Safaricom is probably the most well-known example of that type of remote wallet.

Mobile wallet versus wallet service

There is a distinction between the mobile wallet and a wallet service. The wallet service provides the business context for a specific valuable stored in the mobile wallet. The mobile wallet itself is only the container to store digitized valuables, but it does not add any meaning to them.

Only in the business context of a service does the digitized valuable become meaningful; otherwise it is useless. In payments, for example, the credit card number is a digitized valuable that can be stored in a mobile wallet. The business context for this credit card number is the payment service that is provided by a bank (and/or the card scheme). The bank links the card number to the user’s account and authorizes the payments transaction. Hence, the bank is the payment service provider.

What is a mobile wallet?

What is a mobile wallet?

Terms like wallet and mobile wallet are still missing consistent definitions, especially across industries. The fundamental definitions of mobile wallets, however, have provided a foundation for defining the concept.

A mobile wallet is the digital equivalent to the physical wallet we already have in our pockets today. It is a container (or vault) to store digitized valuables for authorization. These valuables grant permission for usage or access to goods, services or places. They can be:

• A personal identification like an ID or social security card, driving license, health card, payments card, loyalty card, website access or login data, and so forth
• Non-personal means of authentication like tickets for public transport or events, car and hotel keys, gift cards and coupons..

How do mobile wallets work?

The digitized valuables stored in a mobile wallet can be represented in many different forms. They might taken the form of a number, like on a credit card or a password, a digital certificate, a QR code, an image of the owner or something else. These representations are linked to the owner’s sensitive personal information, which means that mobile wallets provide valuable access but also require protection.

Because of the storage of sensitive personal information, strong security is a major issue for mobile wallets. Therefore security features are important for a mobile wallet vault. Requirements for security may vary depending on the wallet’s content, since, for example, a loyalty card is certainly not as valuable as a personal ID or a car key.

History of Rabobank

In the 19th Century, Europe was in Turmoil.

Social conscious pioneers encourages people to standup for their rights to form a political parties, unions and cooperatives.



Its here, Rabobank Story Begins, inspired by Friedrich wilhelm Raiefeisen who was Mayor of small town in Germany Heddesdorf in 1850, was deeply concerned with lot of its citizens. Farmers really had tough time, they left with little to enable them to survive, much less buy new seed.

Raiefeisen came up with solution that was both effective and simple : self sufficiency through self organization and self management. He called on the farmers and setup their own bank, Agricultural bank.

Towards the end of 19th century, string of small banks runs by people for the people sprang up in various cities in Nederland. This leads into the form of Rabobank.

RABOBANK, officially Coöperatieve Centrale RAiffeisen-BOerenleenbank B.A., cooperative banking system in the Netherlands

EMV in US - until 2020???

According to Forrester Report,

Adoption of chip-and-PIN and chip-and-signature technologies for plastic payment cards won’t be broadly adopted in the United States until 2020.

New payment standards don’t address fundamental security issues, Forrester says, and adoption could be slowed by the rise of new technologies like mobile and contactless payments.

Fraud in Cards V

IMPORTANCE OF CUSTOMER

Cardholders who understand how to safely use their payment cards are reasserting themselves as one of the strongest lines of protection against card fraud. Up-front cardholder education increases cardholder awareness which helps decrease unauthorized card use and fraud loss. Industry statistics show that cardholders who review their account activity on a routine basis are more likely to detect and report fraudulent activity, thereby reducing losses. Implement a comprehensive cardholder awareness strategy that emphasizes protecting payment cards and account information from disclosure or risk exposure. Strategies can involve providing card usage instructions to cardholders as accounts are opened or sending statement stuffers and educational mailings. All cardholders should be made aware of:
Safeguarding personal information and records
Understanding their physical environment when using their cards—are people around who could pose a threat?
Actively reviewing statements and receipts to ensure their records are accurate and that their card is not being used without their authorization
Procedures for reporting lost, stolen or compromised cards.

THE PROMISE OF TOKENIZATION

The emergence of tokenization, which enables financial institutions to substitute their cardholders’ personal account numbers (PANs) with a unique substitute value for use in the digital payments environment, shows how savvy consumers can aid financial institutions in the fight against fraud.

By choosing tokenized payments, consumers can simplify their purchasing experience by largely eliminating the need to enter and re-enter the card number when shopping on a smart phone, tablet, or PC. Payment tokens also help mitigate risk in the remote and proximity payments space by removing sensitive card information from the payment process.

Tokenization benefits include:

Enhanced transaction efficiency
Improved transaction security, allowing transactions to be signed and verified as originating from a specific device
A secure method for third party enablement—e.g.: wallet, near field communication (NFC)
Reduced risk of fraud in digital channels such as e-Commerce and m-Commerce. EMVCo, the global standards organization that oversees EMV specifications, has expanded its scope to include tokenization specifications. The development of a global tokenization standard enables a new generation of payment products while maintaining compatibility with the existing payments infrastructure.

PUTTING CONTROL IN A CARDHOLDER’S HANDS

Aware consumers are also being empowered via new technology capabilities that will enable them to actively manage their card usage by defining when, where and how their payment cards are used. These services are ideal for cardholders who want to proactively manage their card accounts through their mobile devices. The financial management capabilities of these tools will enable cardholders to:

Monitor and control card transactions

Manage and review card usage for their dependents

Enforce spending policy compliance for transactions on business cards. Cardholders can simply download these applications to their mobile device then customize usage settings and alert preferences. Mobile card control apps can report or restrict PIN and signature transactions performed by payment cards, enabling cardholders to manage, track, and report specific types of transactions and quickly detect unauthorized activity. Cardholders can generally customize their experience by choosing from a variety of options. With card usage controls, spending limits can be established to allow transactions up to a certain dollar value and decline transactions when amounts exceed pre-defined thresholds. Transactions can also be monitored or controlled for specific merchant categories such as gas, hotel, travel, restaurants and groceries. Card on/off settings are also invaluable. When the card is "on," transactions are allowed in accordance with the cardholder’s usage control settings. When the card is "off," no purchases or withdrawals are approved until the card is subsequently turned back "on." This control can be used to disable a lost or stolen card.

Location controls can restrict transactions to merchants located within a certain range of the cardholder’s location (using the phone’s GPS); transactions requested outside of the specified range can be declined. Regional controls use city, state, country or zip code on an interactive map; transactions requested by merchants outside of a specific region can be declined. Alerts can also be set up to inform cardholders of specific types of transactions. Generally, card control apps can send an alert when a card is used, when a transaction is approved and exceeds any of the permitted use policies, or when a card transaction has been attempted but is declined. The alert is sent in real time, immediately after the transaction has taken place or has been declined.

FINANCIAL INSTITUTION SUCCESS

Cards – debit, credit and prepaid – are the payment method of choice for U.S. consumers, but their fraudulent use won’t stop just because you’re not ready for it.

Unfortunately, EMV is only a partial solution since it focuses on counterfeit fraud only. Every financial institution must still examine its other vulnerabilities, identify its unique needs, and determine an appropriate balance between investigating fraud and processing consumer transactions quickly and efficiently. Incomplete fraud services will seriously imperil your success, so you must do everything you can to ensure the integrity of card account information. Rapidly identifying when fraud has occurred will advantageously position your financial institution. To succeed, you’ll need to build comprehensive and holistic fraud detection strategies that combine risk solutions with personal, hands-on investigative and support services and significant consumer empowerment and engagement. Comprehensive tools, rules, and strategies will provide you with prudent business practices you can use to highlight your commitment to risk management and cardholder satisfaction. Today’s fraud trends demand risk management strategies that improve detection and operational efficiency. An integrated and coordinated risk management solution enables you to build a seamless, multilayered defense against increasingly complex fraud scenarios.