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CRYPTOCard Launches Solution to End Card-Not-Present Fraud


CRYPTOCard's CD-1's two-factor authentication technology, combined with the traditional functions of a payment card in a single credit card-sized device, makes it ideal for both financial institutions and online retail applications.

Card-not-Present (CNP) fraud is fraud conducted over the Internet, by telephone, fax and mail order, perpetrated when criminals obtain card details from discarded receipts or by copying down your details during a transaction. And according to a recent report for the Association of Chief Police Officers Economic Crime Portfolio, CNP fraud is estimated to cost businesses in excess of 183million. In response to this escalating problem, CRYPTOCard, a leading developer of two-factor authentication (2FA) technology, has launched its first combined 2FA payment card. The CD-1 Credit Card Display token is designed to secure online and telephone transactions and address issues where card-not-present fraud may occur.

As everyone knows, the mail and the Internet are major routes for fraud against merchants who sell and ship products, as well Internet merchants who provide online services. "Card Not Present" the industry term for catalog order and similar transactions means that the card is not physically available for the merchant to inspect. The merchant must rely on the holder (or someone purporting to be the holder) to present the information on the card by indirect means, whether by mail, telephone or over the Internet when the cardholder is not present at the point of sale. Obviously, it is difficult for a merchant to verify that the actual card holder is indeed authorizing the purchase. Shipping companies can guarantee delivery to a location, but they are not required to check identification and they are usually not involved in processing payments for the merchandise.
Additionally, smaller transactions generally undergo less scrutiny, and are less likely to be investigated by either the bank or the merchant. CNP merchants must take extra precaution against fraud exposure and associated losses, and they pay higher rates to merchant banks for the privilege of accepting cards. Anonymous scam artists bet on the fact that many fraud prevention features do not apply in this environment.
Merchant associations have developed some prevention measures, such as single use card numbers, but these have not met with much success. Customers expect to be able to use their credit card without any hassles, and have little incentive to pursue additional security due to laws limiting customer liability in the event of fraud. Merchants can implement these prevention measures but risk losing business if the customer chooses not to use the measures.

CRYPTOCard's CD-1 uses an innovative design and manufacturing process to deliver all of the benefits of authentication technology, combined with the traditional functions of a payment card in a single credit card-sized device making it ideal for financial institutions and online retail applications. Based on the premise of 2FA something the user knows, such as PIN, and something he or she has, a credit card token CD-1 provides users with secure one-time passwords (OTP), in order to deliver high levels of security when logging-in to their online or telephone banking account. It is currently being piloted at a number of multinational financial institutions.
According to Neil Hollister, CEO of CRYPTOCard, The continued growth in credit card fraud is of huge concern to our customers, particularly those in finance and retail. Figures released by APACS, for example, show a 185% increase in online banking fraud for the first six months of 2008 alone."
CD-1 the next generation of 2FA solutions promises to help banks in a couple of ways by: one, improving security for businesses and consumers making on-line or telephone financial transactions through a simple integration with a banks channel strategy; and two, by mitigating concerns relating to identity fraud during card-not-present based transactions.
Rik Turner, senior financial services analyst for Datamonitor, adds; Banks recognise the desirability of two-factor authentication and some have extended it to retail customers by issuing dedicated one-time password (OTP) generators to use in association with a PIN number.  The downside of that approach, however, is that it means one more device to carry with you, and thus also one more that can be left in a taxi or have coffee spilt on it"

Turner said that there is clearly market opportunity for something that delivers OTP functionality and the features of another device such as a payment or building access card in a more convenient form. And CRYPTOCard has risen to the challenge. Its solution is unique in combining an integrated device for consumers with an integrated software solution for banks that allows them to identify their customer each and every time they interact with a bank irrespective of which channel the customer is using web, IVR, call center, etc.

Consumers continue to be fleeced big time. In an article by Dinah Greek for Computeractive, she says that while card fraud overall is up, CNP crime accounts for the biggest losses. With CRYPTOCard's solution, available from January 2009, it is hoped that the fraudsters would soon be put out of business.

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