Fintech Insights

How financial institutions are fighting card-not-present (CNP) fraud


July 10, 2019

As predicted, the EMV fraud chargeback liability shift has resulted in a significant drop in counterfeit card present payment transactions. At the same time however, we see a spike in card not present (CNP) fraud.

The increased adoption of EMV following the 2015 chargeback liability shift yielded significant reductions in counterfeit card present fraud. In December 2018, Visa reported an 80% reduction in counterfeit fraud losses among merchants who implemented EMV in the first three years since the liability shift.

Yet at the same time card-not-present (CNP) fraud poses a persistent and rising challenge. Fraudsters were met with new and determined resistance in-store. Data breaches and the increasing sophistication and organization of fraudsters generate the raw data that fuels fraud in card-not-present environments. A 2019 Juniper Research report suggested that retailers will lose $130 billion in card-not-present fraud between 2018 and 2023.

What can financial institutions do to reduce the costs of card-not-present fraud and encourage greater customer loyalty and card usage? One way is to not even get to the point of having to replace cards, by implementing card controls and robust security solutions.

How consumer card controls fight CNP fraud

Card controls continue to gain ground with consumers who are increasingly concerned about the security of their data. US consumers have long expressed interest in enhanced security offerings for their payment cards, with many interested specifically in mobile-based controls to avoid fraud on their debit card accounts.

Card controls give cardholders the ability to restrict usage of their payment card. Restrictions can range from merchant or business type and purchase amount, to geographical location. Consumers especially appreciate being notified of potential fraudulent activity and having the ability to turn their cards on or off– a particularly useful feature to prevent the snowball effect of fraudulent transactions after one goes through successfully.

Cardholders can set controls that reflect their spending habits, exclude transactions at high-risk businesses, limit transactions based on location, and set push notifications. A choice of text messages, emails or calls helps dial in the right level of consumer engagement.

Giving the cardholder the ability to turn their card on or off engages the user to prevent the use of lost or stolen cards when it matters most—as soon as they’re discovered missing. These controls put consumers in the driver’s seat, arming them with the technology that empowers them to be the first-line of defense in a joint effort against fraud.

Card controls—like Worldpay’s MobiMoney app—work by empowering consumers to actively engage in the fight against fraud. MobiMoney lets cardholders customize their debit and credit cards to match things like their spending habits, building trust and confidence in your financial institution. 

How secure technologies fight CNP fraud

Financial institutions can also help deflect CNP fraud with a security solution like Worldpay’s. The OmniShield suite is advanced software that creates real-time alerts when fraudulent transactions are suspected. Built on a foundation of neural network modeling, OmniShield constantly assesses individual cardholder behavior and scores payment transactions based on other cardholder purchases. A team of fraud analysts reviews questionable transactions to determine if cardholder alerts are needed. This combination can help reduce the number of unnecessary cardholder alerts by 60% while also detecting fraud at a rate three to five times higher than other solutions.

Connect with one of our relationship managers to learn more about how Worldpay can help your financial institution in the fight against card-not-present fraud.