CARD FRAUD DETECTION
Empower your banks with real-time fraud protection and user behavior risk analysis to safeguard against fraudulent transactions.
Card Fraud Detection is essential to keep your digital business safe with XTN Cognitive Security®. Specifically, our platform allows you to avoid extra operational costs, prevent financial loss, and preserve your brand reputation.
Market Overview: The Need for Card Fraud Detection
The global market for Card Fraud Detection presents a significant challenge in terms of financial losses and security risks. While it is difficult to estimate the exact size due to underreporting, industry reports confirm that fraud accounts for billions of dollars in losses annually. Furthermore, as criminals refine their tactics, the demand for effective Card Fraud Detection solutions is widespread across all regions. In view of this, banks must prioritize advanced monitoring to combat counterfeit card use and sophisticated online scams.
What is Card Fraud?
Card fraud is an inclusive term for fraud committed using a payment card, such as a credit or debit card. Moreover, it refers to the unauthorized use of someone else’s card information without their consent. Notwithstanding the location, this may involve making unauthorized transactions online, at physical stores, or withdrawing cash from ATMs.
How These Attacks Work
Card Fraud works through unauthorized use of someone’s credit card information. Fraudsters obtain the card details through data breaches, hacking, or physical theft. Subsequently, they make unauthorized purchases or transactions, often online. They may also clone cards or use skimming devices to capture card information.
Most critical Card Fraud methods include:
Card-not-present fraud: This is the fraudulent use of a credit card account without possession of a physical card. Fraudsters might obtain your information through phishing or hacking, and some criminals sell card data online on the dark web. The thief doesn’t need the physical card since online purchases only require that they know your name, account number and security code. Very often, theft is completed with the fraudster purchasing goods for quick delivery using the victim’s card, reselling or returning them to monetize the fraud.
Cloned cards: Devices called “skimmers” that fit over card readers on gas pumps and retail sales terminals can allow thieves to secretly steal your card number when you swipe, then make a duplicate for their illicit use. EMV chip-equipped cards have made this process much more difficult.
Card present fraud: This type of fraud occurs when a fraudster physically presents a counterfeit or stolen credit card to make purchases at physical stores or withdraw cash from ATMs. They may use various techniques to deceive merchants and avoid suspicion.
NFC/RFID Skimming: A criminal practice where attackers attempt to obtain personal or financial information from NFC (Near Field Communication) or RFID (Radio-Frequency Identification) enabled cards without the owner’s consent. They use skimming devices to intercept data at short distances and use the stolen information for unauthorized transactions or identity theft.
The Challenge of Card Fraud Detection
Main risks associated with these crimes are the financial and operational costs required to manage reports from defrauded customers. On the one hand, card providers resolve issues for their specific brands. Conversely, in the case of cards issued by banks, the bank bears the responsibility. Therefore, distinguishing between legitimate and fraudulent activities becomes complex due to the large volume of transactions. To clarify, effective Card Fraud Detection requires advanced systems that can adapt to new patterns in real-time.
XTN Unbeatable Strategy
At XTN, we specialize in providing a comprehensive solution to protect issuing banks from card fraud. Specifically, our solution leverages real-time protection and user behavior risk analysis. Following this, our REST API integration enables banks to receive instant risk-score analysis results, allowing them to block suspicious transactions before they are forwarded to card circuits or accepted for payment.
The XTN Card Fraud Protection solution covers the following main areas of analysis:
- Card Behavior Analysis: Profiling card activity for early detection of suspicious transactions (Business Hour and Geolocation Controls). We have the capability to integrate, within a card issuing scenario, the user’s behavior in card usage with their habits in accessing other channels offered by the bank (online, P2P, TPP).
- Merchant Behavior Analysis: Identifying suspicious activities at the point of sale through comprehensive merchant behavior analysis.
- Analysis of Payment Volume: Utilizing baseline data to detect anomalies in transaction volume and amounts.
- Payment Details Anomalies: Flagging transactions outside of regular business hours and cross-checking geolocation, card issuer country, and shipping address.
- White/Black Lists: Incorporating checks on MCC, card brand, IP source geolocation, Compromised PoS (Point of Sale), reputational information and more for enhanced fraud protection.
By harnessing these advanced functionalities, we empower our Clients to detect and prevent Card Fraud proactively, ensuring the security of their transactions and safeguarding their customers’ financial well-being. At XTN, we are committed to delivering innovative solutions that help banks stay one step ahead in the battle against fraud.
Business Risks
Consequences of Card Fraud can impact a digital business by:
• Operational costs
• Financial losses
• Reputational and brand damage
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