Fraud relating to debit cards is becoming an increasingly serious problem in the financial services industry. It is imperative that debit card issuers provide stringent security systems to protect the data and finances of their customers.
Fortunately, this is possible with a number of processes related to identity authentication and monitoring. Being aware of the signs and patterns of fraud, and how to prevent breaches in advance and in real time, will significantly aid issuers’ abilities to stop fraud and protect customers.
If your business currently runs a debit card program, or is seeking to implement one, the matter of fraud and security should be high on your priorities to ensure customer safety and satisfaction.
Why is fraud such an issue in the payment and card space?
Payment cards and the rapid growth of the internet and financial services has made the possibility to complete transactions and the accessibility of products higher than ever. After all, debit cards are the most popular form of payment among both physical and online transactions.
However, as technology develops, so does the number of possibilities for criminals to successfully defraud debit card users. Criminals have rapidly developed new technologies to defraud consumers and card issuers, always seeking to stay up to date with increasing regulation and security measures in the industry. Increasingly, criminals work in organized rings, becoming more sophisticated over time and working in teams to increase efficiency.
Following successful completion of fraud, data and information are often exchanged for payment on the dark web, with a variety of potential buyers. With the growth of this market on the dark web also comes the increased desire for fraudsters to successfully carry out their fraudulent activities, with growing demand and financial rewards.
While more traditional forms of fraud do of course continue to exist, such as through physical theft or even the use of email hyperlinks, the biggest growth in fraudulent activity comes from the technological space. The hacking of centralized databases is becoming more common, as well as tactics such as phishing and skimming (where devices illegally installed on ATMs capture personal data such as PIN numbers).
What steps can you take to make sure your card program is secure?
There are several main steps that can be taken to ensure that card programs remain secure. It is imperative to implement all these steps, and at the correct time in the customer cycle, as no one step in isolation is sufficient enough to prevent fraud.
Know your customer (KYC): Secure card programs begin before customers even start using their debit card. When a customer opens an account, it is important to complete sufficient background checks to know that the identity of the person applying for an account is legitimate. Building a sufficient profile of the individual will also allow for greater security and potential for data analysis further down the line.
Identity authentication: In order to ensure that transactions are secure at the time of completion, it must be effectively verified that the cardholder is the one using the card. Of course, for physical transactions, this is simple enough with the use of card pins and signatures. However, verification of identity can be more complex online. Key examples for verifying online card payments include authentication through a one-time password, text message codes, or in-app authentication. This allows sufficient authentication of the user’s identity without large levels of friction for the customer.
Transaction monitoring: A further yet necessary layer of security is to monitor the transaction in real time, checking for any risk of fraud at the time of purchase. By using data such as previous transactions and the legitimacy of the merchant, Artificial Intelligence can estimate instantly the chance that the transaction is being carried out by the true cardholder. If the chance of fraud is over a certain level, the transaction can be blocked until sufficient authentication is provided.
Encryption: All data from customers, including card details, should be encrypted. This needs to be the case at all stages of the transaction process. If your business has a large number of customers, this of course means that extensive technology is needed from your business to implement such processes. Though this may create initial barriers to introducing a card payment program, such technology is imperative in preventing cybersecurity threats and the hacking of centralized databases.
Debit card programs with Hydrogen
Hydrogen is SOC2 certified and provides industry-leading protections for all our debit card programs, including all the know-how and infrastructure that you need to launch a successful and secure card program. We provide the necessary frameworks to prevent and flag potential fraud, meaning you can leave the security to the experts and not worry about having to implement extensive technologies yourself.
Hydrogen has more extensive anti-fraud and AML systems than standard banks, so there’s no need to initially patch product launch holes. We use leading tools such as biometric face scans, document verification, and user behavior tracking.
We also automate orchestrations across the platform, including blocking suspected fraud, declining transactions, closing cards, and more.
Hydrogen uses OAuth 2.0 authorization, which has eight authorities and four permission types for sensitive data. Google Authenticator MFA is installed for all sensitive authorizations.
If you are interested in setting up a debit card program with Hydrogen and benefiting from our extensive services and security bundled together in one platform, get in touch today.