Overview of payments industry fraud and available approaches to reducing.

1. Throttling Payment Fraud
Next steps in prevention

2. Card fraud
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3. Fraud penetration points
Device Transaction Data Identity
Industry
protection
level
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4. Fraud sources
Card forgery
Phishing Merchant
scams
Transaction spoofing Card theft
Auth data skimming
Application fraud
First party
Account takeover
Site hacking
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5. Fraud’s open windows
 Device impersonating
 Device active until account disabled
 Exposed validation keys
 Transaction impersonating
 Usage verification is heuristic not positive
 Identity verification is heuristic not positive
 Lack of trend controls for “bust out”
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6. Stopping fraud - tools
 Electronic device fingerprint
 Device registered & controlled for usage
 Tokenization of account validation keys on
device and key resolution “behind the wall”
 Account-user positive confirmation of
transaction
 Biometric verification of account applicant
 Biometric capture of account users
 “bust out” pattern detection/prediction
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7. Fraud tool impact
Transaction
Application
First party
Auth data
Merchant
skimming
Phishing
takeover
Account
hacking
forgery
Device
Device
spoofing
theft
scams
Site
fraud
Device fingerprint  
Device registration &
    
controlled
Tokenization &“behind the
   
wall” res.
Transaction positive
    
confirmation
Biometric applicant
    
verification
Biometric user capture  
“bust out” detection/prediction 
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8. Mitigating fraud impact
 Velocity-based exposure controls
 1st party fraud clearinghouse
 Neural net transaction fraud detection
 Fraud detection clearinghouse notification to
merchant to stop delivery
 Fraudster attribute database matching (ie. Name,
address, phone, etc.)
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9. Fraud tool accommodation
MagCard Mobile NFC EMV
Device fingerprint    
Device registration & controlled    
Tokenization &“behind the wall” res.    
Transaction positive confirmation    
Biometric applicant verification    
Biometric user capture    
“bust out” detection/prediction    
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10. Fraud improvement w/mobile
Device Transaction Data Identity
Industry
protection
level
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11. Conclusion
 Fraud incidence is rising and costs are increasing
again despite industry action
 Fraud avenues of attack are many & varied
 Current approaches still leave several windows
open for fraud attack
 The “card based” device is inherently susceptible
to many of these attacks
 EMV & NFC are still largely open to attack
 Approaches/tools are in reach to
close/significantly reduce those windows
 The mobile payment platform presents the best
way to provide these tools and reduce fraud
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12. Further information on this
Contact me
BCI provides focused consultation and assistance in the
payment systems area
 Payments solution evaluation  Project advisory or management
 Strategy and issue consultation  Architecture direction & rollout
• Quicker and more accurate problem identification and solution
• More dependable delivery of key payment initiatives/projects
• Creative and tested solutions to payment systems improvements
• An objective viewpoint that sees the whole picture
• Deep experience delivering business value through technology
Executive IT help & leadership on payments when you need it
Contact: Mike Batton, President, Batton Consulting Inc. | mike@battonconsult.com | 630-443-7735 (O) 630-862-6799 (M)