As a debit card issuer, you’re in a challenging spot when it comes to protecting your institution and your cardholders from fraud. Fraudsters are constantly adapting and developing new schemes, and cardholders care deeply about the protection of their personal data. They expect their debit cards to facilitate smooth, safe transactions. So how can you be mindful of your cardholders’ experience while ensuring you are vigilant in your quest to prevent fraud?
Using these five strategies will help your institution reduce risk exposure without impacting your cardholders.
HAVE A LAYERED FRAUD MITIGATION STRUCTURE IN PLACE.
You can’t expect to reach acceptable fraud benchmarks if you’re only using your processor to protect your institution against the multiplicity of fraud scenarios. A layered approach to fraud mitigation is key, since no single mechanism can protect against all fraud scenarios. It’s important to review your current tools and evaluate strategies aligned to your risk profile. So what is "a layered approach?" It’s having internal controls in place, as well as leveraging knowledge from your networks and your processor.
HAVE A CLEAR INTERNAL AUTHORIZATION STRATEGY IN PLACE.
Your authorization strategy has an impact on cardholder experience. Pieces of your authorization strategy you may want to review include: your acceptable ratio of false positives, your customer call-center responses to authorization issues/declines, how you’re marking and sharing fraud data with your networks, and staying clear on exceptions you may want to have in place.
don't be the last to convert to chip
With 80% of issuers already issuing chip cards, you have an increased risk exposure for skimming at point-of-sale
KNOW YOUR CUSTOMER. NO ISSUER WILL EVER BE COMPLETELY IMMUNE TO FRAUD.
Have a clear understanding of how your cardholders are spending and being able to detect anomalies can protect both you and your cardholders. According to a 2016 Mercator report, 23% of debit users – especially young and affluent account holders – had a card lost, stolen or compromised in the previous year.
HAVE AN AFTER-CARE STRATEGY IN PLACE TO DECREASE ATTRITION.
Cardholders may hold your institution responsible for fraud events, and upwards of 3 percent of affected cardholders terminate their relationship after a fraud event.3 The churn effects are larger for:
- Cardholders not compensated when charges are classified as possibly legitimate
The best way to balance the impact on your cardholders is to stop fraud before it happens. Talk to a fraud analyst today to help you assess your current fraud strategy.