Visa soon to offer location tracking to its banking partners that will verify the customer’s location on your smartphone whenever the card is swiped. Visa is intending to put a full stop to the annoying calls from the banks when buying things far from home.
The new feature is to roll out in April that lets the cardholders to automatically let Visa know where the user is using the location services in-built in almost every smartphone. This optional service will match up the coordinates of the smartphone and the location of card swiped to prevent instances of credit card frauds.
If the locations does not match, it does not mean the transaction will be automatically declined but Visa uses it as an additional input for its fraud detection algorithm. There is a smaller chance the bank will decline a legitimate transaction if it looks suspicious despite the location match. Visa estimates it can reduce such mistakenly declined transactions by 30% with the new tech.
To set up the location tracker, Visa has made agreements with card-issuing banks to add the option to their mobile banking apps. Over time, the location service will plot out a home range with a radius of about 50 miles. If the customer crosses the border line, the tracker will send that information to Visa and the company will be less likely to flag that card for fraud when purchases are made.
According to the company, retail purchases often slow down when customers travel because of the troublesome process of verifying location by phone to banks. The process also costs these institution millions of dollars in customer service costs of noting pre-travel requests and rooting through mistakenly declined purchases.
Finsphere and Location Labs launched an independent service called PinPoint in 2010 that performed many of the same calculation, alerting users to possible fraudulent transactions. The difference here is Finsphere’s work with Visa directly affects whether a transaction is approved or decline.
The service is optional i.e., banks cannot track a user without his permission. However, this whole tracking thing raises a concern, what if it tracks more than it needs to. When asked Visa and Finsphere, they answered the tracking device gets active only if the user is out of the territory and makes a purchase in a different city. They assured that they do not use any of the information gathered for marketing purposes.
With cyber attacks on consumer information increases on the prowl, the monetary loss every year by credit card fraud is on the rise. According to the latest research on Federal Reserve, $1.5 billion was lost on debit card fraud in 2013 and $4 billion in credit card fraud in 2012. This becomes the reason for the financial institutions and banks to constantly update with new technologies to secure credit cards and prevent frauds.