According to ACI Worldwide, 46 percent of Americans have had their card information compromised at some point during the past 5 years. The Bureau of Justice Statistics reports that roughly 17.6 million incidents of identity theft were reported to law enforcement in 2014, with 86 percent of victims reporting fraud connected to an existing credit card or bank account.
Earlier this year, Equifax announced that the personal and financial data of almost 146 million Americans was compromised. It is the latest in a long line of data breaches that have affected all sorts of different sectors including retail (Target), healthcare (Anthem), entertainment (Sony), government and more.
With the increasing volume of data breaches and 75 percent (TSYS) of Americans preferring to make payments with either their debit or credit card, providing consumers more control over their transactions is paramount. Unfortunately, many banks do not offer comprehensive controls – giving only the ability to deactivate and reactive a credit or debit card.
I would argue that debit and credit card controls need to be much more comprehensive. They should include such features as:
- On/Off Switch: A card can be turned on or off instantaneously via the mobile app. If a consumer loses their card, they can quickly deactivate it. They can also turn their card off when not making purchases and turn it back on before buying something — reducing the chance of fraud.
- Locations: Compares a person’s smartphone location to the merchant’s location for in-store purchases. If a phone is in Georgia, for example, but someone is making a purchase in California, the transaction won’t be approved. Users can set up zip codes, cities, states or countries where the card will work.
- Merchant types: Specifies merchant categories for which transactions are allowed or denied — such as retail stores, entertainment, gas, groceries, etc. A transaction will be denied if the card is used at a merchant not within an “allowed” category.
- Transaction types: Controls transaction types such as in-store, online, auto pay, cash withdrawals and more.
- Spending limits: Sets threshold amounts for various transactions — especially useful if a consumer is trying to stay on a budget.
Consumers should also be given the ability to create alerts, so they know when, where and what is being charged to their cards. If they receive an alert they don’t recognize, they can immediately turn off their card and figure out what’s happening.
While most of the suggested controls mentioned above act more to prohibit usage, controls that enable consumers should also be considered. For example, travel notifications would allow consumers to notify banks to accept charges when they are away from home.
With the increasing amount of data breaches, it is in a financial institutions’ best interest to give consumers the power to control their financial lives – starting with credit and debit card controls.
About Todd Harris
Todd Harris is the CEO and President of Tech CU. An industry veteran, Harris has more than 25 years’ experience in financial services, including in the banking, credit union and leasing company sectors. His company, Tech CU, recently introduced Card Manager, allowing Tech CU credit and debit card holders access to controls similar to the above. He is currently on the Tech CU and Joint Venture Silicon Valley Board of Directors.