Credit cards make business and personal travel easier, but international transactions pose a major risk for credit card issuers. A purchase is more likely to be denied if it originates outside the user’s home country, but up to 80% of those that are denied don’t need to be. MasterCard says that roughly four out of five denied international transactions are actually false positives. Credit card issuers are protecting themselves, but at the same time they risk alienating customers who cannot pay by credit card, and merchants who cannot make a sale.
MasterCard is using geolocation to cut the number of false positives that occur when a legitimate transaction is identified as a potential fraud. An opt-in service matches the location of a customer’s smartphone to the country in which the credit card transaction originates. MasterCard’s partner in the program is IPX provider Syniverse, which has access to more than 6 billion mobile subscribers in more than 200 countries.
“We’re providing an additional layer of fraud protection for when a consumer is on the road,” said Syniverse CMO Mary Patterson Clark. “Over and above the existing fraud protection, [MasterCard is] offering this additional opt-in fraud protection offer to their customers.”
Clark explained that a token is generated by the MasterCard certificate and sent to the platform that Syniverse and MasterCard have enabled. Syniverse then compares the MasterCard’s location to the location of the user’s last registration update. If the two locations are close to one another, the transaction is approved.
The new service launched this year in beta, and MasterCard is already seeing a reduction in false positive identifications of fraudulent transactions. The company also plans to use the service to facilitate purchases of prepaid data packages for travelers.
Syniverse points out that geolocation can enable more than fraud protection. Mobile operators can take advantage of it to push targeted offers to subscribers in partnership with retail stores.
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