Widely publicized data breaches and hacks have made today’s consumers especially concerned about fraud. Cautious shoppers may find comfort in debit, with fraud losses associated with the payment method declining over the past several years.
This payment rail’s use is going strong in the United States, with debit card penetration reaching 78 percent in 2018. Consumers also show continued interest in debit even as they adopt newer payment instruments, and a 2019 report found that 61 percent of mobile wallet users linked debit cards. Financial institutions (FIs) cannot simply expect the popularity of debit to persist unaided, however, and must continue to innovate to keep fraud rates at a minimum. Encouraging use of EMV cards rather than magstripes helps protect consumers against card skimming, and many payments industry players are exploring biometric payment authentication and other methods as well.
The inaugural Next-Gen Debit Tracker® details the evolving debit payments space and the payment methods’ role in banking and retail, as well as emerging strategies to combat fraud attempts.
Card fraud is an ever-present threat. The data of 4 million breached debit and credit cards was even posted for sale in late 2019, stolen from four restaurant chains between April and September 2019, and recently made available for purchase on Joker’s Stash, an online black market. That delay appears to be intended to drive up the data’s prices.
Card issuers, networks and retailers all must play a part in defending against such breaches. Debit network PULSE recently sought to boost its security by adopting a FICO fraud detection platform that can help it quickly detect and respond to suspicious activities. The solution is
intended to support fraud fighting without imposing frictions into the customer experience.
Breaches are not the only reason why card networks come under fire, however, and Mastercard and Visa recently made headlines for alleged misbehavior. The U.S. Federal Trade Commission (FTC) is investigating whether these companies illegally prevented merchants from routing debit transactions over alternate networks.
A Big-Picture Approach To Thwarting Debit Fraud
Old forms of cybersecurity are not enough to keep up with fraudsters’ increasingly innovative attacks. New forms of card-not-present (CNP) fraud are being launched and counterfeit cards remain a pressing issue. Even customer behavioral analysis can fall short of detecting some thieves, according to Doug Clare, vice president of fraud product management at the consumer credit score, analytics software and fraud detection platform provider FICO. In the Tracker’s Feature Story, Clare explains why FIs must take behavioral analysis beyond the customers’ activities to keep the fraudster’s at bay.
Get the full scoop in the Tracker.
Debit cards give consumers the advantage of limiting how much they spend to only what they have in their accounts — unlike credit cards, which can encourage more irresponsible behavior. That direct connection between debit cards and their users’ bank accounts can turn into a problem, should fraudsters get their hands on the cards. Hackers are thus eager to use stolen debit details to deplete victims’ savings at ATMs and points of sale.
This month’s Deep Dive examines the forms of fraud that threaten the security of ATMs and in-person debit payments as well as new types of attacks that have risen to challenge debit use in eCommerce. The Deep Dive also explores how banks and payment providers are working to overcome these threats.
Read this story in the Tracker.
The Next-Gen Debit Tracker®, a PULSE collaboration, provides an in-depth examination of debit’s changing role in both banking and retail and gives a data-rich, insightful look on how providers can innovate within this area.