As fraud perpetrators become more sophisticated, merchants are continuing to upgrade their technologies in an effort to combat fraud.
The problem extends across borders, so do some of the solutions. ISOs should keep up with developments nationally and internationally so that they can offer their merchants the best solutions.
iBIZ software, Bellaire, Texas, is supplying its CommerSafe MPI fraud detection solution to Kwikpay Technologies (London) merchants under the Verified by Visa and MasterCard Secure Card programs. KwikPay Technologies offers merchants a proprietary transaction solution.
CommerSafe MPI gives KwikPay the benefit of quick time-to-market and knowledge that the company can offer online transaction processing without the risk of certain chargebacks, according to KwikPay officials.
Advances are being made to combat ATM fraud as well. Paderborn, Germany-based Wincor Nixdorf (North American headquarters are in Austin, Texas) recently announced security devices that will protect users from skimming and the recent "Lebanese loop" attacks. Both devices will be available in the fourth quarter.
The Lebanese loop attack attempts to obtain an original ATM card and a PIN. The loop itself is a sleeve or plastic or other material that is placed in the card reader, trapping the card and preventing it from being retained by the card reader. When the customer leaves the ATM, the thief then has access to the ATM card and account information.
Typically, when a card jam of this nature occurs, the ATM can be taken out of operation. However, the culprit may have already seen the customer's PIN number.
To combat this type of attack, Wincor Nixdorf has developed a special holding mechanism that prevents the illegally installed sleeve and the customer card from being removed.
When the card is inserted in the slot, the mechanism pulls in the card completely and put out again to ensure that the entire transport path is free. If the path is blocked (i.e., by the Lebanese loop), the ATM is taken out of operation before the customer has a chance to enter a PIN number. In addition, a solid steel mandrel mechanically blocks the cardso that the criminal can't remove it without damaging it.
A separate Wincor Nixdorf module is designed to prevent skimming at its ProCash T ATMs. The module includes a sensor that permanently monitor the ATM's card slot so that if a skimming device is identified, the sensors immediately take the ATM out of operation.
Some merchants are going to biometric devices to help prevent fraud, speed checkout lines and improve customer service. Biometric devices deter fraud by identifying a fingerprint or some other biological feature unique to each individual.
According to a survey funded by the U.S. bureau of Justice Statistics, a large of consumers said biometric scans are acceptable for making credit card purchases (85 percent), making ATM withdrawals (78 percent) or for accessing sensitive financial and medical files (77 percent).
In an earlier report, Gartner Consulting Group pointed to biometrics' ability to "heighten accountability, reduces losses .and to improve service levels by speeding access."
A suburban Seattle, Wash.-based grocery store, Thriftway, has already had good success with its biometric payment program, which uses a customer's fingerprint for identification, a program that's been in effect for about a year.
Initially, there was some concern about security, said store owner Paul Kapioski. However, customers were assured that the system mapped only a dozen critical points of the fingerprint, enough for the store's purposes, but not so much that a customer's fingerprint could be "stolen" for use in other applications.
Store customers also prefer the faster moving lines for fingerprint payments than for other forms of payment, according to Kapioski.
To enroll in use for the system, customers register or more of their credit, debit and checking accounts. Once enrolled, consumers access their accounts by touching a small reader linked to a credit card device or cash register and selecting their preferred way to pay: electronic check, credit or debit. The service verifies the enrolled shopper andprovides account data to the checkout lane for approval. The transaction is then routed through the conventional financial networks.
About 12 percent of the store's customers use the fingerprint system, Pay By Touch, developed by Oakland, Calif.-based Indivos.
"We have a double-digit enrollment rate without consumer incentives," Kapioski added.