Fraud Prevention with Mobile Location Confirmation (MLC)

By Saranya Haridass

Bank card holders use their cards at various locations, while traveling from one place to another. During this period, banks have to take measures to prevent fraud which is a difficult task, as the card holder has to be authenticated. To ensure fraud prevention, banks can avoid false positives - by tracking a card holder’s mobile if the card is linked to a mobile phone number.

Fraud systems decline some of the transactions at different locations if they do not follow the pattern of past transactions made by the customer. This leads to the increased false-positive ratio. It then becomes the banks’ responsibility to ensure necessary actions are taken to reduce the false-positive ratio in order to gain the customers’ confidence. e.g. When a person transacts using the card in an urban center and then transacts in another city while traveling, the system detects this as an unusual pattern. Then it declines the transaction or blocks the card.

Secured Card Transactions During Travel

Banks gives customers an option to inform the bank before traveling, so they can update the cardholders’ card details in exceptions (hot-listing cards list). Such cards will not be considered for filtering.

Sometimes, if a customer forgets to inform about the travel, there is a chance that transactions could be declined. As part of the fraud prevention measures, financial institutions spend considerable resources in managing the operation costs and in analysis of declined transactions. Visa has come up with a new service called Mobile Location Confirmation (MLC) to solve this problem.

Benefits of MLC

• Secure payment experience for travelers 
• Preventing declining of valid transaction as suspicious or fraud 
• Preventing the blocking of cards by fraud detection system 
• Takes less than a millisecond to identify and match the location 
• Can be activated / deactivated at any time by the customer 
• Attaining customer satisfaction by safe payment option

How it works

• Install the issuing banks mobile app 
• Agreement with the network to access the geo-location 
• Activate the mobile internet or Wi-Fi during travel 
• On swiping the card anywhere during travel, Visa will access the geo-location of mobile and then compare it with the swipe location 

o   If the location matches, it sends the request to issuing bank authorization

o   If the location doesn’t match, the transaction could be declined

Conclusion

We need a solution, which filters transactions based on the rules. The system should also be integrated with the mobile network thereby identifying the fraud with the help of geo-location.