Visa has created a “Mobile Location Confirmation” service for payment authentication. This service can be integrated into mobile banking apps, after which, if the mobile device is in proximity of the payment transaction during the payment authorization process, the issuer can then confirm the transaction. Visa Mobile Location Confirmation uses mobile geo-location information to more reliably predict whether it is the account holder or an unauthorized user making a payment with a Visa account.
A number of firms in the payments industry have developed authentication systems on top of the card networks. For example, Retail Decisions (ReD), BillGuard, and Payfone provide location- and mobile network-based authentication services. ReD uses IP geo-location detection technology for fraud protection; BillGuard has incorporated location based features for its PFM app; and Payfone ties the phone's SIM card, device ID, and location to each customer's account. The innovations from these firms may have acted as a catalyst for Visa to create its own location-based authentication service, but it is not clear whether Visa's service will provide the same richness in capabilities that others have spent many years perfecting - for example, Payfone uses real-time information from the largest mobile operators and the largest banks in addition to many other sources to determine the authenticity of a subscriber.
Finsphere Corporation, a leader in the use of mobile data and geospatial analysis, provides Visa with an analysis of the account holder’s device location data, which is then matched with the transaction location in less than a millisecond, right at the point of sale. When a cardholder’s mobile device is in the same location as the payment transaction, the issuing financial institution can approve the transaction with confidence.
It is encouraging that a card network a handling the majority of transaction network traffic is coming up with new and innovative fraud protection and authentication add-ons, thereby adding multiple layers of security to its payment network. Taking hints from Visa, it is expected that MasterCard and other card networks will soon follow suit.
According to Visa estimates, issuing financial institutions spend hundreds of millions of dollars annually to manage customer service calls related to pre-travel requests, and to research declined transactions. By providing financial institutions greater intelligence when approving transactions, Visa expects to reduce such declines by as much as 30 percent, impacting millions of transactions annually and improving the experience for cardholders, merchants, and financial institutions.
Click on the thumbnail below to access the infographic highlighting the service in elaboration: