Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) are the leaders in PCI industry. These companies combined handle billions of $ worth of transactions. So with more revenue, the risk of frauds would increase. If the number of fraudulent transactions increase, it would be unnecessary burden for these companies.
Companies like Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) have planned to work with wireless carriers such as AT&T Inc. (NYSE:T) and track the location of the consumer by tracking the location of smartphone during the time of fraudulent transactions.
Crayton Harrison of Bloomberg reported this morning how companies like Mastercard Inc (NYSE:MA) and Visa Inc (NYSE:V) are trying to fight fraudulent transaction and looking to minimize the losses caused by such transactions. He started by stating:
“Pretty much everybody who has a credit card has at some point, had it stolen. “
So it’s a big pain for a user to call the bank and have them replace the card. There are also situations where our transactions get blocked while we are on vacations. So with this new solution when the transaction goes through, the credit card network such as Visa Inc (NYSE:V) or Mastercard Inc (NYSE:MA) would check with the wireless provider to confirm if the person is in the particular are where the transaction has actually happened. Once they confirm the location of the consumer, the transaction would get completed without a problem.
This solution is not a foolproof one and if the burglar is in the same location as the user, it doesn’t work. Harrison agrees that the solution doesn’t work in such situation, however it could cut down on a lot of transactions that are either a false positive where people says it’s a fraud and it actually isn’t or they should be rejected because somebody is making them at a wrong place. This definitely saves a lot of money for the payment gateway companies like Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA).
There might be privacy concerns in such situations as someone would be tracking where you are at any point of time. Harrison said that the solution is currently in testing phase and the companies that are working on this project are Visa Inc (NYSE:V), Mastercard Inc (NYSE:MA) and AT&T Inc. (NYSE:T). These are the companies that already have a lot of information about the users. They key point to be noted is that this is being done on an opt-in only basis. So if you don’t want to be tracked, you won’t be!
There has to be money flow in all of this as the wireless providers won’t take all the pain for nothing. Harrison said that these companies are still figuring it out. However he said that the wireless carriers are planning to charge per transaction based fee of probably 10 cents or something similar to it. Thought this might generate a lot of revenue for the providers, it would help the banks to reduce the cost involved in verifying a false positive and save money for them. This also helps improve the brand value of Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA).