Prepaid Card Security

Technologies and Trends

Arlene Hauben

Jan 21, 2015: In October 2014, President Obama signed an executive order to tighten security measures for federal credit cards, and urged banks and retailers to follow suit in an effort to combat the growing threat of identity fraud.

The order, which Obama signed before a packed crowd of regulators at the Consumer Financial Protection Bureau (CFPB), stated that the administration will add microchips and PIN numbers to government credit cards and debit cards starting in January 2015.

For years, banks and retail industry groups have been conflicted about how to solve the problems of fraud and identity theft. The dispute about improving the security of electronic payments goes on, while consumers are increasingly skeptical about swiping credit and debit cards in stores and using online when they pay bills and make purchases. Fraud, identity theft and data attacks are plaguing our nation – breaches involving US entities accounted for 41.1 percent of incidents worldwide, according to Risk Based Security. There were more than 12 million identity fraud victims in 2012, and fraudsters stole nearly $21 billion, according to Javelin Strategy & Research. This is about one victim every three seconds.

"The idea that somebody halfway around the world could run up thousands of dollars in charges in your name just because they stole your number, or because you swiped your card at the wrong place in the wrong time, that’s infuriating," said President Obama.

Big Retailers Addressing Security Problems
Several major companies are taking steps to make their point-of-sale systems more secure and offer more customer protections in the store and online. After security breaches that damaged big retailers like Home Depot and Target, the industry is more serious than ever before about making technical improvements and looking for other ways to ensure customer identity.

American Express plans to launch a $10 million program to help small businesses upgrade sale terminals. Visa will invest in education programs about microchips, MasterCard is offering free online identity theft monitoring and Citi Cards will partner with FICO to make free credit scores available.

Banks want retailers to bear more of the costs of replacing cards after breaches occur, while retailers said banks have been slow to adopt new technologies, according to news sources.

Prepaid Providers Responding to Consumer Concerns
Quite a few prepaid companies, including RushCard, NetSpend and USBank, are working with Enacomm to improve their security technology, according to CEO Michael Boukadakis, Enacomm, a security provider to processors and program managers.

“In a rapid growth industry such as prepaid, sometimes companies are playing catch up,” said Boukadakis. “RushCard wants to go beyond with security technology.”

RushCard will employ Enacomm's eKBA mobilized authentication of customers. This will include caller verification methods that rely on basic information and voice biometrics technology provided by Enacomm. In addition to putting new security measures into effect, Enacomm recently implemented its self-assisted service solution for RushCard. This solution focuses on creating intelligent customer interactions with an interactive voice response (IVR) system.

RushCard will be using ENCART, Enacomm's Network Call Allocation Routing Tools that provide dynamic real-time load balancing among call centers for incoming calls; ViA, Enacomm's analytics tool for call centers featuring real-time IVR and computer telephony integration reporting, monitoring and alerting; and Engage, a single, browser-based console that will allow RushCard to enhance and direct its IVR system.

Voice biometrics authentication has a 99.99 percent success rate and is more reliable than fingerprinting. Voice authentication can be integrated with new or existing interactive response (IVR) and call center systems, saving 20 percent or more of customer service representative’s time, resulting in reduced costs and a much-improved customer service experience.

These security systems can help prepaid be as safe as credit cards. “Consumers who use prepaid want the same level of protection with prepaid cards,” said Boukadakis in an interview. “The goal in prepaid is to raise the level of comfort for the users to the same level that they have with credit or checking accounts.”

“It is an exciting time for the use of security in prepaid. There will be a vast amount of announcements in the near future,” said Boukadakis.

There is even a new, more novel way to confirm the customer on the phone. Organizations can now ask their customers to snap a selfie (facial recognition) or repeat a phrase (voice authentication) to prove their identities, combining biometrics and KBA.

With the advent of smartphones, Boukadakis said we should expect to see more biometrics being employed. “Now we have a vehicle to implement dual mode authentication,” he added.

Both the American Bankers Association and the National Retail Federation welcomed the news of Obama's executive order and support the measures.

Obama said he hopes Congress will "do its part" and pass cyber security legislation to create a national standard for handling data breaches.

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