Five Strategies to Reduce Fraud Risk

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.


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. 

  • Start with an internal fraud strategy that defines an acceptable range of loss and acceptable levels of cardholder impact.

  • Network-based tools from PULSE, your signature network and secondary debit networks are the key to the second line of defense. These tools can help identify additional potential fraud and give you access to fraud experts. Solutions like DebitProtect® incorporate neural scoring and anomaly detection, letting issuers know sooner when spending behaviors don’t match with a cardholder’s normal spending habits.  

  • Processor-based rules are effective and an important piece of the strategy, but because your processor won’t see the full picture of your transactions, they lack the broad network knowledge.


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 cards1, you have an increased risk exposure for skimming at point-of-sale if your institution has not already converted. If you’re looking to make your move to chip, it’s also a really good time evaluate your program. Learn the five questions you should ask when thinking about your signature debit program. 


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.2


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
  • Cardholders who have been with the institution the longest
  • Cardholders with loss amounts less than $500(average is $125)3
  • Following fraud events with quality customer care is imperative, given the 20 percent attrition rate experienced with those dissatisfied with post-fraud customer service.4 Create mapping on the customer journey after a fraud event and have messaging in place to quickly address cardholder concerns. Empowering your call center and front-line employees to empathetically assist through the often-frustrating process can increase the likelihood of customer retention. 

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.


1. Debit Issuer Study, August 2017 
2. Mercator Annual US Debit Market Data Review, July 2016
3. Security, Fraudulent transactions and Customer Loyalty: A Field Study 2016
4. Aite Group - Global Consumer Card Fraud: Where Card Fraud Is Coming From, July 2016
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