Sweeping Bad Actors Out Of The Trusted Debit Space

Did you know that 80 percent of customers prefer debit cards for everyday purchases? Or that as the average customer spends up to 100 percent more when using a debit card versus cash?

Resilient, trusted debit cards have been riding a wave of popularity since COVID arrived, as PYMNTS’ December 2020 Next-Gen Debit Tracker® done in collaboration with PULSE, A Discover Company, calls out a potential $100 billion annual shift away from credit in favor of debit. “This shift is likely due to the pandemic-driven economic downturn as individuals grow more reluctant to take on debt and prefer to spend the money they already have.”

And while debit is hardly new, major players are doing clever new things with debit to make the beloved financial product more aligned with current digital trends in consumer spend.

Securing debit innovations is the mission now, as the 2020 spike in usage is like chum in the water to circling cyber-sharks. That’s happening with all speed as debit use climbs.

Careful With That CNP

Given findings that more than 72 percent of consumers were expected to leverage electronic payment methods over the holidays that just ended, reliable debit is having a field day. So are cybercrooks, who will eat anything — debit, credit — it matters not to fraudsters.

“Debit card issuers face an ever-growing array of fraud schemes perpetrated against them and their account holders. Effective card offerings require FIs to quickly and accurately detect myriad forms of fraud, forcing them into a delicate balancing act,” the Tracker notes.

With two-thirds of card issuers expected to field contactless debit by the end of 2020, and 87 percent of all cards to be contactless-enabled by 2022, that’s where fraud efforts are focused.

Per the Next-Gen Debit Tracker®, “Addressing security concerns is no trivial pursuit for debit issuers, as they incurred more than $1 billion in net fraud losses in 2019. Certain types of debit transactions are riskier than others … with CNP [card not present] purchases typically more prone to fraud than card-present (CP) ones. This is because CNP purchases, which include mobile- and web-based transactions, can be harder to verify than those that require users to supply their PINs.”

It’s bringing about change, forcing banks and financial institutions (FIs) to know legitimate cardholders’ patterns so as to pick off the phonies if and when they come. “These approaches could even prove to be more secure than knowledge-based authentication (KBA) measures, because information such as PINs can be stolen, while behavioral patterns are much harder to mimic,” per the Tracker.

Debit Cards And The Real You

Issuers are finding effective new ways to keep debit the most trusted card product on the pandemic market by keeping debit safe. That’s easier said than done, but doable.

December’s Next-Gen Debit Tracker®  details the fact that “Many FIs seek to learn account holders’ purchasing habits and create behavioral profiles by analyzing their keystroke patterns, determining which devices they use to transact and establishing average purchase sizes.”

Learning their real customers’ true behaviors and having an always-on way of intelligently monitoring for deviations at mass scale is where new platform solutions are proving worthy.

“Fraud threats are ever-changing,” the Tracker notes, “and losses associated with digital money transfers are projected to rise 130 percent worldwide by 2024. This can make investments in advanced security tools especially timely, and issuers may find that [machine learning] solutions are well-suited to digital challenges. ML solutions can help FIs spot well-known red flags as well as new behaviors that indicate fraud, and this adaptability can help debit issuers keep their defenses sharp as fraudsters switch up their attacks.”