ValidSoft tackles cross-border credit card fraud

Global card fraud runs to £65bn a year

Fraud prevention company ValidSoft has unveiled its latest security software designed to combat cross-border credit card fraud.

The company claimed that global card fraud costs approximately $100bn (£65bn) a year, and that its VALid-POS software is a must-have money saving device for financial institutions.

John Petersen, global head of business development at ValidSoft, argued that the technology can also increase revenues.

"It will mean that more interchange fees are processed as customers use cards more and banks do not have to spend as much money on processing false positives, which can range from £7.50 to £11 [per transaction]," he said.

Petersen argued that risk management systems used by banks currently have a 90 per cent rate of false positives, which often occur when a card is being used legitimately but is nonetheless blocked by ATMs. However, ValidSoft's new software will reduce this to just one in 10, he added.

VALid-POS will do this by resolving issues in real time using telecoms technology to confirm whether the card is close to the customer's mobile phone, the firm said.

"We know where every phone is in the world. We have access to the global mobile networks and have partnerships with all the global carriers," said Petersen. "It works simply by someone travelling and letting us know their number. It's invisible to the user."

The software is automated, and the only information required for it to function from the bank's side is the customer's mobile number.

VALid-POS then confirms or rejects the decision made by the bank's risk management system within one second, causing no inconvenience to customers, according to ValidSoft.

If VALid-POS denies a card, the system can be configured automatically to ring the mobile of the account holder and ask them to verify whether the transaction is legitimate or not.

If the transaction is legitimate, the card will be unblocked. If not, the call will be transferred automatically to the relevant bank's fraud team.

ValidSoft also claims that the software will help free up banks' fraud prevention officers to work on other cases.

Peterson argued that a lot of fraud is currently undetected by banks as risk management systems are "saturated".

"VALID-POS allows banks to monitor 300,000 concurrent transactions, so more fraudulent activity will be detected," he said.

ValidSoft has also obtained the European Privacy Seal, which required the company to fulfill rigorous compliance requirements including data avoidance and minimisation, transparency and data protection.