AmEx’s Old School Innovation For Location Authentication

The ability to identify where corporate and consumer cardholders are while they’re traveling is becoming a growing market, as issuers, card networks and telcos are looking to provide businesses and issuers with better authentication methods and improved travel-management services.

Among the latest to venture into cardholder location services is American Express Global Business Travel, a joint venture of Amex that this week introduced a card-swipe tracking service in conjunction with Amex’s AX Connect service. Through the initiative, businesses can locate their employees while they’re traveling through their Amex corporate cards.

The “card swipe” functionality enabled through the service would join a growing list of products designed to identify where cardholders are at any particular time, either for travel management of fraud-security purposes.

Although Amex is not alone in wanting to authenticate payments when card holders are traveling—though unlike others AX Connect is card-based, instead of dependent on geolocation tech built into smartphones.

Location market growing

MasterCard noted earlier this year that a key frustration shared among travelers abroad is the fear that their transactions will be denied because of overly conservative fraud-prevention measures put in place by their card issuer, or by the merchant where they want to shop. A declined transaction can prove to be a major travel-related headache at best, or a real disruption in financial stability at worst.

MasterCard addressed those concerns through a new partnership with Syniverse. Announced at the Mobile World Congress 2014 in Barcelona, Spain, the initiative being piloted by the two companies would enable MasterCard customers to opt in to a mobile-payment program activated when they enter a predetermined geographic location outside of their normal service area.

AT&T says it, too, is enabling use of location-based information from customers’ smartphones to determine whether a credit card purchase is legitimate. Essentially, AT&T would use its network data to find a participating customer’s phone and then detect any change in location. For example, AT&T can confirm whether a customer flew from one city to another when that customer turns his or her phone back on upon landing. Then, if a charge is attempted in another city during that flight, the transaction would be declined.

In a statement, Laura Merling, AT&T vice president of business digital experience, said companies want to be able to solve challenges and get ahead of their competition. “Our new Location Information Services API does that by allowing enterprises to provide an extra layer of credit card security, keep track of valuable assets, and enhance a traveler’s experience with timely local information,” she said.

Regulators are watching

Such ventures, however, have caught the attention of U.S. regulators and lawmakers. Indeed, the mobile marketplace has experienced remarkable growth, with new products and services offered almost daily, many of which rely on consumers’ geolocation information, Jessica Rich, director of the Federal Trade Commission’s Bureau of Consumer Protection, testified recently before Senate Committee on the Judiciary Subcommittee for Privacy, Technology and the Law.

And while products and services that use the information can make consumers’ lives and a business’s operations simpler and more efficient, such data also can reveal consumers’ movements in real time and provide a detailed, comprehensive record of their movements over time. As such, use of this sensitive information can raise privacy concerns, she said.

Amex gets around such concerns by using the benefits of operating a closed-loop network.

No phone geolocation

In a crisis, Amex notes in an announcement about its new functionality for its AX Connect product, incomplete itinerary information and spotty cellular and data connections can thwart travel managers’ attempts to locate and provide care to their employees. Through its relationship and continued close ties to the Amex, Global Business Travel has developed new “card swipe” functionality for AX Connect.

“This functionality allows travel managers or company security teams to view an integrated representation of a traveler’s itinerary information and
recent American Express Corporate Card transactions to help pinpoint
their location during an emergency situation,” Amex noted in an announcement of the new service. “Knowing where and when
employees have used their corporate card empowers businesses to locate
and assist their travelers in times of need with greater accuracy and
speed.”

Once businesses have located their travelers, AX Connect’s intuitive user interface enables travel managers to push crucial information to them via SMS, email, or a mobile app, and prioritize aid to those travelers with the greatest need.

Location-based services are gaining momentum, both via mobile devices and through the trail left by individuals’ card use. Whether mobile-based initiative prove to be too Big Brotherish for regulators remains to be seen. But Amex’s use of its closed-loop card network as a location-based service seems intuitive, to say the least.