MasterCard and mobile technology company Syniverse this week announced a trial that may help to cut down on credit card fraud, by using smartphone geolocation to pinpoint the whereabouts of the cardholder when a credit card transaction takes place overseas.
The opt-in service now being trialled will only allow overseas credit card transactions to be approved if the cardholder’s smartphone is switched on and within the vicinity of where the transaction is taking place.
Fraud protection systems used by credit card providers will often decline overseas card transactions that they believe to be suspicious. While this can help to cut down on credit card fraud, cardholders who forget to tell their bank they are travelling overseas can be left high and dry when their card gets declined as a ‘fraudulent’ transaction.
MasterCard and Syniverse hope to put an end to that by using the cardholder’s smartphone location and matching it to the location of the credit card transaction. If the two match up, the transaction will be processed. If they don’t, the transaction will be declined.
A seamless payment and mobile experience
“This collaboration of two global technology leaders opens up a whole new range of possibilities for end users, ensuring a seamless payment and mobile experience,” said Hany Fam, president of global strategic alliances at MasterCard.
“By leveraging the speed and intelligence of our global network and combining it with geolocation solutions, we are enabling your MasterCard to uniquely work where you and your phone are, anywhere in the world.”
Joe DiFonzo, chief technology officer of Syniverse said, “As soon as a mobile phone connects to the phone network we can see a user’s location within milliseconds, just by which mobile phone mast they connect to and it is unspoofable, as we get the data directly from the back end of the network.”
All the answers?
However, while it may be “unspoofable”, there is the issue of smartphone users’ avoidance of data roaming charges. According to research by Syniverse and Informa Telecoms & Media, up to 70% of smartphone users turn off their data services when travelling overseas, and 50% switch off voice services.
That means no smartphone signal. Which means no smartphone to geolocate, and no way to confirm the cardholder’s position when a credit card transaction is processed overseas.
Perhaps unsurprisingly, MasterCard has an answer for this. When the cardholder arrives in another country, his smartphone will prompt him to buy a pre-paid data package, allowing him to connect while travelling. Win-win for everyone.
Nevertheless, some questions still need answered. What happens if the cardholder leaves his phone in the hotel but still needs to make a purchase on his credit card? What happens if the phone runs out of battery? What happens if the card transaction takes place in an area with no mobile signal?
In the MasterCard-Syniverse release, it mentions the value of knowing exactly where cardholders are in the world. The value to marketers and advertisers, that is.
“Mobile network operators and brands can also benefit from the collaboration between MasterCard and Syniverse,” the release says. “In the future, they could implement targeted offers, which will be made more relevant by knowing the location of a mobile device, for example in close proximity to a retail store.
“A research report for Syniverse from economists at SEEC uncovered a market valued of as much as $US44 billion for operators providing services to brands based on opted-in mobile subscribers’ information, behaviour and location – known as mobile context.”
Win-win indeed.
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