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.