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these markets reporting that they either closed their accounts or changed providers. These findings highlight that consumers in mar- kets with established payments systems tend to be more resilient to fraud than those in emerging markets—perhaps because of greater consumer protections in more advanced economies or general consumer inertia, espe- cially around account switching.
As shown in the chart above, while the majority of consumers have taken steps to be more careful when transacting post-fraud, a sizable portion of mobile banking compromise victims (22 percent), online banking victims (16 percent) and online payment victims (13 percent) opted to use the affected card or account less after experienc- ing fraud. Additionally, a substantial number of mobile banking compro- mise victims (14 percent), online banking victims (16 percent) and online payment victims (13 percent) opted to carry on transacting as they always have. Such findings carry significant implications for payment providers. Reduced card and account use poses a serious threat to a payment provider’s bottom line. Payment providers that
maintain a roster of customers who don’t change their behavior after experiencing fraud open their system up to repeat attacks, put- ting the integrity of their payments system at risk.
Although a range of technologies like biometrics authentication, tokenization, and real-time location and behavioral analytics have the potential to make many payment scenarios—including CNP transac- tions—safer, payment providers should not overlook consumer behavior and attitudes toward information security when building their fraud-prevention strategies.
Back-End vs. Consumer- Facing Fraud Tools
When it comes to information security, consumer behavior is difficult to control—especially in an age where passwords and PINs (which largely rely on the customer to exercise security best practices) are widely used for authentication. To overcome this dilemma, pay- ment providers have a few options. They can look to diminish the consumer’s role in the security value chain by employing tech- nologies, such as risk-based and behavioral analytics, that work in
the background to determine the authenticity of a customer making a transaction. This tactic crucially minimizes the potential avenues open to fraudsters and will give payment providers greater control and oversight.
The other option is to equip cus- tomers with tools to directly tackle card fraud online and at the POS. For example, mobile-based card management services enable consumers to lock and unlock their accounts based on their prefer- ences across many parameters, such as channel, transaction value, merchant type, currency and location. These services typically operate in real time and block transactions outside of the card- holder-set parameters.
Given the agility and astuteness
of cybercriminals, no one technol- ogy is (or ever will be) a silver bullet to securing payments in an ever-connected world. As the tools and channels through which con- sumers and merchants transact continue to multiply, adopting a comprehensive (yet constantly evolving) multilayered approach
to security is a must for all players within the payments ecosystem.
Theresa Jameson is a senior analyst
in the consumer payments team at Datamonitor Financial in London, where she focuses on emerging payment tech- nologies, such as NFC, digital wallets, wearables and mobile POS, as well as payment fraud and security. This article is an excerpt of a larger report. She may be reached at tjameson@datamonitor.com.
volume 8 • fall 2015
Cardholder response to Fraud
KeY: nMORe CAReFul OveRAll nhAve NOT ChANGeD behAvIOR
nuSe The CARD/ACCOuNT leSS
nDON’T GO bACk TO WheRe They ThINk FRAuD OCCuRReD
62%
22%
14%
Mobile banking compromise victims
Online/telephone compromise victims
Online payment compromise victims
–2% –4% –4%
80% 100%
64%
16%
16%
70%
0 20%
40% 60%
source: Datamonitor Financial’s Payment Fraud Customer Analysis, 2015
13%
13%
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