How to decrease card not present (CNP) fraud
As predicted, last October’s EMV fraud chargeback liability shift has resulted in a significant drop in counterfeit card present payment transactions, but at the same time, spiked card not present (CNP) fraud. Auriemma Consulting Group reports in their Card Fraud Control Benchmark Study that card present fraud has dropped to its lowest level since 2013, falling 18 percent in Q1 2016 from the previous quarter. CNP fraud, on the other hand, has jumped by 12 percent.
While EMV adoption appears to be having the desired effect, the overall problem of payment fraud isn’t exactly disappearing. Plus, there’s a new wrinkle: once their payment card has been compromised, consumers are less likely to use that card again. A report prepared by the Aite Group revealed that 40 percent of consumers whose payment card is used fraudulently use their replacement card less often. The obvious ramification for financial institutions is that replacing customers’ compromised cards may not be enough to rebuild the goodwill lost as a result of fraud.
What can institutions do to build customer trust and encourage card usage? One way is to not even get to the point of having to replace cards, by implementing card controls and robust security solutions.
Although a fairly new innovation in banking, card controls are gaining ground with consumers who are increasingly concerned about the security of their data. Three out of five U.S. consumers expressed interest in enhanced security offerings for their payment cards, according to a recent survey from Mercator Advisory Group. And, 42 percent are interested specifically in mobile-based controls to avoid fraud on their debit card accounts.
Card controls give cardholders the ability to restrict usage of their payment card. Restrictions can range from merchant or business type and purchase amount, to geographical location. Consumers especially appreciate being notified of potential fraudulent activity and having the ability to turn their cards on or off– a particularly useful feature to prevent the snowball effect of fraudulent transactions after one goes through successfully.
Card controls like Vantiv’s app MobiMoney work by empowering consumers to be part of the solution in the fight against fraud, with a convenient way to manage their payment cards. Cardholders can set controls that reflect their spending habits, exclude high-risk businesses, limit transactions based on locations, set push notification alerts, text messages, emails or calls regarding suspicious transactions, and turn their card on or off. These types of controls put consumers in the driver’s seat, arming them with the technology that allows them to be the first-line of defense against card fraud.
Another way institutions can help deflect CNP fraud is with a security solution like OmniShield Suite from Vantiv. The solution works in several ways including validating the Authorization Request Cryptogram (ARQC) with all online authorization requests, to help ensure that the card is authentic. It also monitors the Application Transaction Counter (ATC), the counter that increases with each EMV transaction; a significant decrease or increase may indicate fraudulent activity on the card. Additionally, OmniShield monitors for transactions on EMV cards and terminals that fallback to magstripe.
To find out more about CNP fraud solutions like these and others for your financial institution, contact Vantiv.