Your credit card has been a lifesaver on several occasions, right? From medical emergencies to unplanned but necessary expenses, having a credit card or two on hand has helped us all out of some difficult financial circumstances. Having a credit card helps to facilitate seamless business transactions between merchants and customers by making it convenient to engage in the exchange of goods and/or services for payment without the use of cash. Persons tend to gravitate towards acquiring credit cards because of the security it brings with not having to carry around cash in their pockets. Other pull factors may include the ease of shopping both in stores and online anywhere and at any time, building credit and receiving travel or cash back rewards. Upon the advent of the era of credit card usage, along came its evil twin, credit card fraud.
According to Britannica, credit card fraud is “the act committed by any person who, with intent to defraud, uses a credit card that has been revoked, cancelled, reported lost, or stolen to obtain anything of value. Using the credit card number without possession of the actual card is also a form of credit card fraud. Stealing a person’s identity in order to receive a credit card is another more threatening form of credit card fraud, because it works in conjunction with identity theft.” It is not easy for companies to readily detect when criminals are at work. Fraudsters now have access to sophisticated technology with the ability to produce exact replicas of existing credit cards to make unauthorized purchases rendering many companies vulnerable to cyber security breaches. It therefore means that a collaborative effort is necessary to clamp down on incidences of credit card fraud. A healthy synergy between the IT and Customer Care departments for many companies is very essential for credit card fraud management.
For some persons, a telephone call from their bank to conduct purchase verifications before authorizing charges gives them a sense of security while for others, it may be deemed as an annoyance especially when they miss the call. You may receive a telephone call from your bank if it notices unusual card activity, for example, an expensive purchase out of town. Applying purchase caps on your credit card may also hinder offenders from using your card to make exorbitant purchases.
Verifications may also be done after the credit card is used. After the card is electronically processed, a human may then assess the data to determine if there are any inconsistencies. This can occur when the merchant notices that there is a sudden change in shipment location. A company may call the credit card owner if shipments are being channeled to an address that differs from the card’s usual listed shipping address. By introducing the use of EMV or chip-and-PIN cards, financial institutions have made a conscious effort to prevent fraudulent credit card transactions. Unlike the traditional cards which possess only magnetic stripes, pin and chip cards are loaded with encrypted information that is constantly changing thus making them more difficult to clone.
There has been a move to improve fraud assessment on a more granular level through the implementation of behavioral analytics. Behavioural analytics incorporates the use of artificial intelligence to identify and collect information on each credit card holder’s spending patterns. Typically, individuals are given a profile and transactions are tracked in order to predetermine their future shopping patterns. This can significantly help to crack down on credit card fraud by using information such as your favourite merchants and frequently used ABMs to anticipate behavioural patterns to execute fraud detection and prevention programmes.