Card Fraud Countermeasures
Card frauds are relatively rare thanks to a number of countermeasures by:
Card issuers (banks, card companies)
To encourage the consumers to use and continue to use payment cards, card issuers are continuously investing into advanced technology to prevent card frauds. Most card issuers use a special software which detects unusual behaviour and transactions that may indicate a card fraud. These systems work by monitoring card purchases of an individual card holder; it takes into account various factors such as location and time of the purchase, the height of the cost, merchant, etc. If the software detects anything unusual, the card issuer contacts the holder in the shortest time possible and requests verification of the purchase. If the risk of a card fraud is high, card issuer may also reject authorisation of the transaction and block the card until its holder verifies the transaction.
Besides monitoring card activity and taking the above mentioned measures to prevent an eventual card fraud, card issuers also combat frauds by:
- requiring multiple authentication in order to ensure access to the account only by its holder, usually by requiring additional authentication information such as PIN, ZIP code, account number, etc.
- using out-of-band authentication or two separate channels or networks such as security token device or mobile phone
Retail staff plays an important role in card fraud prevention because without their full cooperation, even the most sophisticated systems are ineffective. Some of the main card fraud countermeasures by the merchants include:
- PAN truncation. This card fraud countermeasure involves limited display of the card number on receipts, preventing criminals from obtaining card details from discarded receipts. PAN truncation usually hides all but the last four numbers to prevent both frauds and allow the cardholders to record transactions.
- Requesting additional authentication, usually PIN code.
- Tokenisation. It refers to a method of handling with sensitive information which substitutes a part of information or in case of payment cards, a part of the card number with non-decryptable characters.
Regulatory and governmental bodies
These also help improve card security by enacting laws in regard to consumer protection, assessing and examining card issuers, and monitoring and publishing the standards, guidelines and recommendations in regard to card security and fraud prevention.
To prevent card frauds, the cardholders need to do their part of the job. How to avoid becoming a victim of card fraud, please read our articles “Card Fraud Prevention”, “Card Safety Online” and “Card Safety Abroad”.