Visa to use smartphone tracking to combat card fraud
14 February 2015
Payment processing company, Visa, is set to roll out a new feature that would allow its cardholders to inform their banks their location automatically, using the location function found in nearly every smartphone, Associated Press reported.
Credit and debit card fraud hits consumers and banks to the tune of billions of dollars each year, and the figure is likely to balloon with data breaches becoming common.
Debit card fraud cost the banking industry $1.57 billion in 2013 while credit card fraud hit $4 billion in 2012, the latest years for which data the Federal Reserve made data available.
In the face of the high costs, banks and the payment processors had been looking for ways to cut down on fraud.
According to JPMorgan Chase's chief Jamie Dimon his bank spent $250 million overall on cybersecurity every year, and planned to double that spending.
The roll out of Visa's new feature is due in April, with banks updating their smartphone apps to include Visa's new location-tracking software, Mashable reported.
If the consumer opted in, the Visa software would over a period of time, map the customer's home territory to roughly a 50-mile radius. If the person used his or her Visa card at stores in that area, the transactions would be considered low-risk for fraud.
Visa believes, retail purchases often slowed down when customers travel due to the burdensome process of verifying location by phone to a financial institution. The process also costs these institutions millions of dollars in customer service costs of noting pre-travel requests and routing through mistakenly declined purchases.
Visa also claims that the feature could be switched off at any time and that data would never be used for marketing purposes.
Justin Bookman, director of consumer privacy at the Center for Democracy & Technology, told Associated Press, banks already effectively had access to customer location data through purchase records.
A number of privacy experts have hailed the move saying that the use of this feature could protect cardholders and cut down credit card fraud.