Helping Consumers Help Themselves: Avoiding CNP Fraud With Payment Controls

Post EMV implementation, point of sale (POS) fraud is on a downward trajectory and is expected to decline further. Card not present (CNP) fraud, on the other hand, is expected to see consistent growth – so much so that CNP fraud will be four times that of POS fraud by 2018, according to a recent study by Javelin Research.

Statistics from i2c’s Global Fraud Monitoring Center confirm this trend, with a 15% increase in account use fraud seen over the past 2 years. Disputed credit card use at drug stores, gas stations, and supermarkets have the highest value per transaction, yet online and telemarketing scams (where the credit card is not present including direct marketing, subscriptions, and other business services) happen with far higher frequency.

As the decline in counterfeit fraud indicates, financial institutions are fighting back with better fraud detection and prevention systems. Mitigating fraud risks associated with the CNP transactions, however, is proving more difficult and requires a holistic strategy as cyber criminals continue to find new ways to breach systems and steal cardholder data. The news last week of a young Russian hacker stealing hundreds of millions of email usernames and passwords– often a first step in further financial account compromise– is a serious reminder of the challenges faced in combating fraud.

One thing issuers can do is to arm cardholders with easy-to-use technology so they can be part of the first-line of defense against fraud. A new generation of advanced card control features and real-time alerts give cardholders more control so they can block high-risk merchants, limit transactions based on location, and set real-time alerts via push notifications, text messages, emails, or phone calls so fraudulent transactions can be detected earlier.

i2c was the first payment processor to offer payment control features at the processor level, which makes it easier for issuers to provide consumers with customizable features like spending controls and alerts on critical account information and suspicious transactions. Card controls not only help reduce fraud and improve cardholders’ trust, but also help consumers in budgeting and planning their spending. We just announced a major expansion of our platform level payment control features, adding new capabilities including purse-level controls that give cardholders more options in how they carry out their financial plan, control their spending, and receive real-time alerts triggered by external contextual information like geo-location or even traffic. This is in addition to the ability to block transaction types (like overseas transactions, for example) or payments to specific merchants selected by the cardholder or those on a blacklisted IP address list.

Card control features enabled at the processor level make it easy for issuers and program managers to enlist their customers in the battle against CNP fraud, giving them greater flexibility and control to protect themselves and manage their financial well-being.