Dubai: The global payments business is clearly gaining an upper hand over fraud and data breaches, thanks to the new technologies and constant efforts of all stakeholders in the industry, Ellen Richey, Vice-Chairman of risk and public policy for Visa Inc told Gulf News in an interview.
“The perception of risks associated with card payments are much larger than the actual threat or reported losses. But the lack of trust that comes from such perception could impact the growth of the payments industry,” said Richey.
Reports on large scale data breaches often trigger panic. The more such cases of fraud are reported, customers tend to lose faith in the system. However, Richey said the rate of fraud is on decline and currently stands at about 6 basis points.
The industry-wide developments such as the migration to chip based EMV [Europay, MasterCard, and Visa] standards and tokenization are revolutionising the payment security across the world with the US currently lagging in the chip-based cards. Richey expects 2015 to be a turning point in EMV migration with more than 50 per cent of cards and terminals in the US to be chip-enabled by the end of the year.
While she argues that electronic payments remain much safer than cash, at the same breath she says payments security is a work in progress and will continue to remain so in the foreseeable future.
“Fraud is something that we can’t say will be eliminated completely. But efforts by all stakeholders in the industry can contain it to the minimum. Visa’s efforts are focused on working close with all our partners, law enforcement and government agencies throughout the world to better deter criminals,” Richey said.
Apart from occasional data breaches from merchant sites, counterfeiting of card and card not present at the time of transaction are the two main types frauds the payment industry currently faces. Card data falling into the wrong hands is one of the big problems the industry faces as online transactions typically don’t require the card to be presented. The information sitting on the card and other customer authentication details are sometimes compromised and used for transactions.
“With the available technology, such frauds can be easily prevented. While the adoption of chip and pin [personal Identificatin Number] cards limit the possibility of security breaches, growing adoption of dynamic pins, encryption of card numbers and integration of biometrics card authentication can stop these types of fraud,” said Richey.
Visa has been doing a number of things in partnership with issuers to prevent such fraud. A number of banks around the world are offering customers the option alerts whenever there is a transaction. Visa is also pushing of wider adoption of chip cards. “In all new of fraud prevention efforts, the objective is to make the card data useless to the potential fraudster,” she said. In chip card a unique cryptogram or code is generated for each transaction. So, even if a card is counterfeited, it will be declined,” she said.
Visa uses a combination of sophisticated analytics to simple rule based transaction disciplines to prevent fraud. Tokenization of transactions using dynamic pins and encryption of data along with biometric authentication and verification of customer location using latest technologies are used in preventing fraud.
“There are a number of less sophisticated but effective fraud prevention measures that both issuing banks and customers can adopt to keep them safe. For example customers can define a set of rules for transactions like a spending limit, places of transactions, etc. If there is a deviation from these, the transaction won’t be complete,” said Richey.