GB2457536A

GB2457536A - A transaction processing method that enables the early detection of fraudulent use of a credit, debit or payment card.

Info

Publication number: GB2457536A
Application number: GB0802174A
Authority: GB
Inventors: Gary Simon Crowther
Original assignee: Individual
Current assignee: Individual
Priority date: 2008-02-06
Filing date: 2008-02-06
Publication date: 2009-08-26
Also published as: GB0802174D0

Abstract

A method and system for transaction authorisation/fraud detection in credit, debit and payment card systems. Upon completion of a transaction the bank or card issuer sends a transaction summary to the card holder. The summary may be sent by SMS and/or Email and may only be sent for "card not present" transactions (i.e. on-line or telephone transactions which do not require chip and pin verification).

Description

Card Fraud -Early Detection Method

Background to the Invention

Card Fraud in the UK in 2006 cost �427.9m according to statistics published by the UK payments association, APACS.

This was broken down across the following fraud areas: : \ 1 Card-not-Present �212.6 million Counterfeit � 99.6 million Lost / Stolen � 68.4 million Mail non-receipt � 15.4 million Card ID Theft � 31.9 million TOTAL �427.9 million Many previous invenflons have been suggested to address the growth of Card Fraud, the most successful of which has been Chip and PIN.

While the introduclion of Chip and Pin in 2005 has achieved significant reductions in fraud across most areas there is one exception, Card not Present' which has increased from �150.8m in 2004 to �212,órn in 2006 in the UK.

Many Card Fraud prevention methods have been suggested Including those under Patent Applications WO 03/079258 Al, EP 0 745 961 A2 and US 2006/0059110, all focussing on the Introduction of differing separate verification steps prior to authorisatlon of the transaction.

Typically this requires the deployment of additional in process' physical components such as mobile message hubs' or voice gateways' as well as an additional device that the Card Holder needs to be provided with to receive and transmit authorisallon messages prior to the transaction being authorised by either the Card Issuing Bank or Card Issuer.

All of these inventions have limited commercial appeal due to cost of deployment, e.g. the additional Infrastructure components necessary within transacflon authorisation process as well as those associated with providing each Card Holder with an authorisatlon transmission device.

In addition, the cumbersome nature of the authorisation process e.g. the reliance on the sending and receiving of request and authorisailon messages using public transmission methods precludes the method from normal transaction processing.

These methods also rely on each Card Holder remembering to keep their authorisation transmission device with them whenever they wish to use their Credit, Debit or Payment Card.

Statement of the invention

To address the Impact of Card Fraud without compromIsing the authorlsatlon process, the invention defines a transaction processing method that will facilitate the early detection of the fraudulent use of a credit, debit or payment card.

By transmitting a summary of a card transaction to the card holder's mobile phone and email address, the card holder will have an early opportunity to alert The card issuer of unauthorised card usage.

As one Illustrative embodiment of the Invenlion, an online ("Card not Present") transaction takes place, at the point of authorisation by the Issuing Bank or Card Issuer's system, a summary of The transaction is transmitted to the card holder via SMS text message to their mobile phone and by email to their elected email address.

The card transaction Is processed and authorised as normal by the Issuing Bank/Card Issuer as Card Holder response to the summary message is NOT part of the transaction authorisation process.

If the transaction was valid the card holder would ignore the summary message with no acknowledgement to the sender, If however the card holder was unaware of the transaction summarised in the message a response indicating such, by SMS text response, email reply or via telephone would initiate the suspension of the card pending further investigations.

Pending timely response by the card holder this could limit fraudulent use of a card to one transaction thereby reducing fraud costs to the card issuer.

Advantages It is recognised that Chip & Pin authorisatlon Is the most fime efficient verification process and that adding further separate verification steps would increase the transacilon processing time sufficiently to render It unworkable In a commercial environment.

Therefore this inventIon focuses on a method to provide the earliest opportunity to identify fraudulent use of a card and to suspend the card rendering it useless to the fraudster, The invention does not introduce an additional verification process prior to transaction authorisatlon It Is designed to provide an early warning of fraudulent activity on the card.

By informing the Card Holder of each cord transaction, they have the ability to Identify fraudulent use of their card and inform the Issuing Bank or Card issuer of such after the initial fraudulent use of the card, thereby reducing the financial impact of the fraud.

Detail of the Invention The Invention prescribes the introduction of a method within the existing Transaction Authorisation process whereby the Issuing Bank or Card Issuer includes a step (subsequent to the authorisatlon of a transactIon) whIch sends a Transaction Summary Information message to the Card Holder.

See Figure 1 No response to the message Is required and the transaction is authorised as normal.

The Card Holder would receive an SMS Text message, and/or an email stating the date.

time and value of the transaclion, and a request to respond If the transaction was not one that they were aware of.

This would alert the Card holder to a fraudulent use of their card, the ability to immediately advise of such, and provide an early opportunity for the Card Issuer to prevent further fraudulent transactions.

A negative response to the message would result in the automatic suspension of the card pending further enquiries.

If it was a valid transaction the Card Holder would Ignore the message and the transactIon would be posted as normal.

Deployment Deployment of the proposal would require enhancements to exIsting Transaction Authorlsatlon and Card Activation systems.

Whilst detailed analysis and development of individual systems would be required, simplistically this could involve an amendment to the card authorisation database to include a trigger' at time of authorisation and the logic to interpret a response to the message and to Interface with the card activation system should a card need to be suspended.

The Card Holder would be required to sign up to the service and for them to provide the number of an SMS Text message receiving mobile phone and/or valid email address.

In return the Card Issuer could offer a reduclion in the annual card fee or interest rate charged, and/or bonuses for early detection of a fraudulent use of their card.

The cost to the Card Issuer of IT systems development would be offset by the first year savings made by the early detection of fraud however the ongoing cost of the SMS messaging could be reduced by liaison with the supplying telecoms companies and/or could be recouped by charging the recipient of the SMS text message for the cost of the message.

This cost would be Insignificant to most Card Holders and would be seen as being offset by preferential interest rates or reduced card fees offered for signing up to the system.

It would be beneficial to use both SMS text and email as alerting methods to help to address the Issue of Card Holders changing phones or email addresses and not Informing the Card issuer.

This may require the implementation of increased Customer Relationship Management processes to malntatn accurate customer details, but would need to be assessed on an Individual Issuing Bank/Card Issuer basis.

A First Illustrative Embodiment The first embodiment of the Invention Is where It Is adopted for "Card not Present" online transactions only.

This is by far the most difficult type of card transaction to secure as it does not require the provision of a PIN and Is commonly used with skimmed' credit/debit cards.

The practice of card skimming is where the data from the magnetic strip is electronically captured and other card details recorded, such as name, expiry and start dates, often along with the security code on the signature stp.

This activity is generally commftted when the card is out of the Card Holder's sight during a transaction In a restaurant, petrol station or such like.

The usual practice Is to test' a stolen/cloned card to see if it Is active or has already been suspended, by attempting a low cost' initial transaction, such as signing up to a website for downloads etc. Once the low value transaction has been accepted the fraudster knows that the card Is active and valid and Is able to embark on higher value transactions.

The Card Holder's ability to respond to this initial fraudulent transaction would enable the Issuing Bank or Card Issuer to suspend the card after this initial low value transaction reducing the fraudulent cost liability of further transactions.

A Second Illustrative Embodiment The method could be deployed to generate a transaction Summary Message for ALL card transactions.

This would provide the maximum Card Fraud Early Detection capability but would necessitate each participating Card Holder receiving multiple Transaction Summary Messages.

Currenily in the UK there are approximat&y 11,OXD Chip and Pin transaction per minute, therefore A benefit of limiting the transaction Summary Message to Card not Present' transactions only, or other specific types of transaction, reduces the number of message sent by the issuing Bank or Card Issuer avoiding the possibility of Card Holder complacency created by receiving too many Summary Messages. a

Claims

Claims 1. An automated method for alerting a Card Holder of use of their credit, debit or payment card by SMS text message and/or email.
2. An automated method for alerting a Card Holder of use of their credit, debit or payment card according to Claim 1, for specific types of card transaction, such as online or telephone purchases only-Card not Present'
3. An automated method for alerting a Card Holder of use of their credit, debit or payment card according to Claim 1, enabling early detection of fraudulent use of that card
4. An automated method for alerting a Card Holder of use of their credit, debit or payment card according to Claim 1, facilitating early reporting to the Issuing Bank/Card Issuer of fraudulent use of their card
5. An automated method for alerting a Card Holder of use of their credit, debit or payment card according to Claim 3, facilitating the Issuing Bank/Card issuer to be able to suspend a card affer the first fraudulent transaction
6. An automated method for alerting a Card Holder of use of their credit, debit or payment card according to Claim 4. enabling the Issuing Bank/Card Issuer to reduce their card fraud costs liability