Credit Card Companies Turn to Selfies to Prevent $118 Billion Worth of False Declines

Payment via mobile device is gaining in popularity thanks to the latest smartphones making it easier than ever to pay bills or send money whenever needed. Yet, this trend also presents an interesting conundrum. What’s the best way to make mobile payments, and how can they be processed with minimal chance of being compromised?

Currently, two-factor authentication may provide the best answer.

MasterCard wants to implement biometric-based two-factor authentication to improve security and cut down on false-positive transactions. The system in question utilizes a selfie taken by the user through a mobile application. The image is then compared to an image that’s stored. If it’s similar enough, it will authenticate the user's identity. Other methods of biometric technology such as fingerprint scanning are also being used to help prevent credit card fraud.

However, security isn’t the only way that this biometric authentication improves user experience. MasterCard wants to cut down on the number of legitimate transactions that are being declined while users are traveling abroad. This is a bigger problem than even credit card fraud. As reported by The Financial Times, roughly $118 billion worth of false declines take place every year, which is 13 times more than the amount lost on credit card fraud. Biometrics are expected to help cut down on the amount of false declines and credit card fraud.

ITProPortal offers some insight into what will be necessary for mobile payment systems to take off:

“User devices are notoriously prone to penetration by cyber criminals – whether that’s as a result of users adapting their devices or overriding device security parameters, or using non-secure public WiFi when transacting online. Which means biometric data will need to be encrypted to ensure it cannot be stolen – otherwise we open a whole new vector for identity theft. What’s more, rigorous PCI standards already exist to protect users and merchants, especially where liability is concerned should things go wrong. What’s not clear in this scenario is whether liability will shift – and to whom. Quite simply, we’re in new territory here.”

I hope you picked up the implied shift of liability in that quote. If users aren’t securing their mobile devices and are using them for payment, are they at fault if their financial information is stolen or lost? If so, this could change the way financial institutions and payment compliance function. In particular, biometric hacking could become a major problem; you can’t issue a new face or fingerprint like you would a new credit card number.

Therefore, it’s crucial you take measures to ensure the safety of your mobile devices, especially if you plan on using them for two-factor authentication. What are your thoughts on mobile payment authorization using a selfie-based system? Let us know in the comments.

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