Payment card frauds are a reality in a world that is increasingly growing cashless. Additionally, this fraud is also migrating from more secure to less secure regions and channels.

In India, even though the Reserve Bank of India (RBI) reported a lower incidence of 8,322 cases of cyber frauds in 2012 — a decline from 9,588 cases in 2011 and 15,018 cases in 2010 — there are two key differences in the nature of frauds today.

One, many of the frauds in India now have a global face; two, they are increasingly being perpetrated by organised and adept criminal communities, unlike in the past when individuals were involved.

However, if stakeholders work in tandem, the incidence of fraud can be sharply reduced. And progress in this direction could be faster than what has been made so far.

In fact, managing fraud should not be seen as the bastion of only the banks, payment platforms or the government. It is time for financial institutions, service providers, technology pioneers, merchants, law enforcement agencies and cardholders to come together. Crucially, advances in technology have brought about a suite of innovations and services that foster greater protection for consumers from payment card frauds. Therefore, an integrated approach and induction of superior technologies is clearly the need of the hour.

Tech to the rescue

This becomes all the more imperative in a nascent, albeit growing cashless market such as India. The overall debit and credit card usage at the Point of Sale (PoS) has seen rapid growth. According to the RBI, the number of transactions using debit cards at PoS was 327.5 million, a shade higher than the 320 million transactions using credit cards at PoS.

In a market with such a scale of transactions, how can all the stakeholders come together to ensure greater protection? What has been the progress so far?

Technology as a key enabler of fraud management: In recent years, the global payments industry has been banking increasingly on technology not only for ease of use at the customer-end but also for making card payments more secure.

Using state-of-the-art predictive modelling technology, MasterCard provides issuers with a real-time predictive fraud score on all transactions at the time of authorisation. Innovations like these are steps ahead of even the RBI’s latest mandate that credit and debit cards should be issued only for domestic use by default and that international cards will have to be EMV chip and PIN-enabled.

Checking cyber crime

The banking community in the country, conscious of the problem of payments fraud, has started taking proactive steps which are laudable.

Some of the larger banks that are credit card acquirers have replaced some POS machines at merchant establishments, following card ‘skimming’ frauds.

Further, with virtual cards now being issued by a few banks, it makes it more difficult to steal data. With bankers being more aggressive in advising merchants to invest in security partners who will enable secure networks for payment processes, there could be a decrease in frauds.

It is also heartening to note that some of the Police departments across various states have been running a seven-day capsule course on cyber crimes for police stations, in association with India’s leading software association, Nasscom.

With the course now being mandatory for all police officers, apart from those who are already part of the cyber crime cells, it has helped local police stations investigate cases related to cyber crime, including credit card fraud, with greater vigour.

Safety practices

Finally, practices adopted by customers in using credit and debit cards will go a long way in ensuring greater card protection. For example, while shopping online, it is useful to ensure that that the Web page address should start with “https” not “http”. The “s” that is displayed after “http” indicates that the Web site is secure.

Also, while travelling overseas, it is advised to notify one’s bank so that it is aware that overseas transactions will be made. If not, the unfamiliar spending patterns could cause your bank to suspect that your card is being used fraudulently and thus delay your card purchase approvals.

The : RBI’s latest policy and technology guidelines could mark the beginning of a new era to help check card frauds. With banks moving towards a system that facilitates authentication for cards issued in India and used internationally, there will be closer coordination between them and the authorised card payment networks.

Similarly, the new guideline that allows banks to block cards via SMS if needed will make it easier to protect consumer interests. In September 2012, it became mandatory for telecom operators offering mobile wallets with cash-out facility to sign up customers only under a Banking Correspondent tie-up.

These measures could perhaps take time to take full effect. But they would have a long term positive impact in driving payment card protection measures.

(The author is Area Head - South Asia, MasterCard)

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