An Apple Pay solution that keeps fraud away

March 11, 2015 by Matt Tatham

Apple Pay fraud solution

Apple Pay is here and so are increased fraud exposures, confirmed losses, and customer experience challenges among card issuers. The exposure associated with the provisioning of credit and debit cards to the Apple Pay application was in time expected as fraudsters are the first group to find weaknesses. Evidence from issuers and analyst reports points to fraud as the result of established credit/debit cards compromised through data breaches or other means that are being enrolled into Apple Pay accounts – and being used to make large value purchases at large merchants. Keir Breitenfeld, our vice president of Fraud and Identity solutions said as much in a recent PYMNTS.com story where he was quoted about whether the Apple Watch will help grown Apple Pay.   

The challenge is that card issuers have no real controls over the provisioning or enrollment process so they currently only have an opportunity to authenticate their cardholder, but not the provisioning device. Fraud exposure can lie within call centers and online existing customer treatment channels due to:

  • Identity theft and account takeover based on breach activity.
  • Use of counterfeit or breached card data.
  • Call center authentication process inadequacies.
  • Capacity and customer experience pressures driving human error or subjectively lax due diligence.
  • Existing customer/account authentication practices not tuned to this emerging scheme and level of risk.

The good news is that positive improvements have been proven with bolstering risk-based authentication at the card provisioning process points by comparing the inbound provisioning device to the device that is on file for the cardholder account. This, in combination with traditional identity risk analytics, verifications, knowledge-based authentication, and holistic decisioning policies vastly improve the view afforded to card issuers for layered process point decisioning.

Learn more on why emerging channels, like mobile payments,  call for advanced fraud identification techniques.