The year 2013 saw a spiraling increase in credit and debit card fraud as cybercriminals employed sophisticated toolkits and malicious techniques to exploit security vulnerabilities. In Unisys’ annual survey of security trends, U.S. citizens listed financial security and personal security as their two top concerns, with the most worrisome threats being credit-card theft and identity fraud. Similarly, latest figures from the Financial Fraud Action UK reveal, fraud losses on UK cards totaled £450.4 million in 2013, a 16 percent rise on the total of £388.3 million in 2012.
Even as banks are improving security features with chip and pin cards, countering such attacks requires a targeted, multi-level approach based on robust security standards and advanced fraud detection capabilities. Darren McGrath, Unisys Global Director – Mobility Solutions, explains how geo-location technology can help financial services providers and retailers adopt new and effective ways to detect and counter bankcard fraud in real-time.
How does geo-location technology help in preventing fraud?
Geo-location technology helps determine a person’s physical location through the identification of the IP address of a device connected to the Internet or GPS built into the device. This information can then be used to validate the authenticity of a transaction made via a card and the person who is making the transaction. A tighter integration between a mobile device and a card allows financial services providers to identify a user’s exact location, calculate the distance between their billing address and where the order actually took place.
How can banks use mobile geo-location to minimize unauthorized purchases made via stolen/counterfeit cards or flag suspect transactions?
The technology helps payment providers determine if a transaction should be processed, put under watch, or denied. It helps balance out the risk of fraud losses and the risk of blocking vigilant customers.
With real-time authentication checkpoint, banks and merchants can use the geo-location data to send out warning alerts to users and prevent fraudulent transactions. This location-based intelligence makes it harder for fraudsters to exploit bankcard data or personal details as the technology can confirm the user’s location through GPS-enabled mobile device as well as the location of the transaction.
With users taking to mobile shopping, can geo-location help drive mobile payments with a new layer of security?
Security is the biggest concern when it comes to mobile payments. By tying the user to the device and to the bankcard, geo-location provides a secure means to authenticate payments made via mobile devices. The improved security allows retailers to tap into “geo-marketing” by pushing location-based offers and personalized deals at an in-store location. After all, it’s about the customer experience, especially when you walk into a grocery store and your iPad beeps, “welcome back, check out today’s offer on dairy products.”
What happens to the privacy associated with location data?
The location data may have personal details as well as financial history of users, which makes it extremely vulnerable in the face of increasing identity thefts. The security risks often extend beyond targeted or location-based spamming. How the data is collected, used, shared, protected, and archived poses serious risk to the geo-location information. While the geo-location technology offers secure ways to authenticate transactions, stringent privacy policies, guidelines, and governance programs are required to ensure the protection of user data and remain compliant with industry regulations.
There’s little doubt that geo-location technology is set to reshape the traditional, standard approaches to payment security, while becoming a key differentiator in customer engagement.