Preventing fraud against 2010 tourists

Neo Africa has presented Secure Solution as a remedy for credit card fraud, but it's not viable, says an analyst.

The company says Secure Solution uses mobile card activation technology developed in SA to offer secure services to tourists visiting the country for the World Cup.

The package, which is supported by MasterCard, Vodacom and Standard Bank, includes a mobile phone handset and a pre-paid travel card in local currency, says Neo Africa.

“This dependable, reliable technology will revolutionise payments worldwide. It is already capable of allowing cardholders to manage their own card permissions per country; to selectively allow ATM withdrawals, merchant purchases and even to specifically allow a single Internet e-commerce transaction. Importantly, the technology can detect and stop fraud where the new chip card has been issued incorrectly and swiped at a merchant point-of-sale,” says Neo Africa founder and CEO Vivien Natasen.

Cardholders have complete control over their card, which cannot be used without the linked mobile phone, says Neo Africa. Users are able to switch their debit card on and off using the mobile phone. By default, the card will automatically switch off after every transaction, rendering it unusable to anyone other than the authorised cardholder should it be lost or stolen.

Neo Africa executive Craig Kilfoil explains that it works just like any other card, except it is pre-paid and it is by default switched off. The cardholder must switch it on for each transaction. The cardholder uses an application loaded onto the phone to switch the card on and off.

“The card can be topped up at any time, and Neo Africa has built in functionality to top up at the touch of a button. Similarly, the cardholder can transfer money back into his or her other accounts before the card expires.”

“Typically, fraud prevention has been the bank's problem and more often than not trying to identify and stop fraud has been guesswork at best. As a result, the cardholder is inconvenienced both when fraud slips through and when legitimate transactions are declined as a security precaution,” says Kilfoil.

He adds that apart from cardholders' complete control over their cards via their mobile phones, travellers also receive a text notification on the mobile handsets. They receive these SMSes when a card transaction is successful, and also when a transaction is blocked, informing the cardholder of all use of the card, whether fraudulently attempted or simply a reminder that they have forgotten to activate their card for that particular transaction.

Natasen believes the invention will ultimately change the way people do their credit card banking on a global scale and “make credit card fraud, a multibillion-dollar problem the world over, virtually obsolete”.

“The solution is interesting, however, similar solutions utilising SMS confirmation of usage are already in place in SA, although less comprehensive,” says WWW Strategy MD Steven Ambrose.

He says there are two main issues that may make this type of complete solution less than acceptable to most users of credit cards. He explains that the first problem deals with the inconvenience of having to switch the card on before every transaction.

“Although most people don't leave home without their phones, it may happen that they do, and that renders the card inoperable. The main reason people have credit cards is convenience, and this system makes these cards far less convenient and easy to use, by adding another layer of authentication,” adds Ambrose.

The second issue is cost. “The cost of the package is high in relation to the perceived loss due to credit card fraud, as most credit card companies, and the client's banks, respond well to fraud on card transactions. In most instances, the user is reimbursed in full, and suffers no actual loss. The obvious exception is when there is gross negligence.”

He adds that the solution is innovative and comprehensive, but makes transactions less frictionless and convenient, and the costs may outweigh the perceived benefit for most users.

“Credit card fraud is huge, and very real, but making the card very difficult to use and transact on is a bit like securing a network by cutting all access to the outside world. The benefits don't outweigh the inconvenience.”

Kilfoil says that the initial Secure Solution packages are aimed primarily at foreign visitors to SA for the World Cup and so these pioneer cards will expire after the event. “The card will expire shortly after the World Cup, but the cellphone will be a fully functional handset that can be used anywhere. It is a fully functional dual-SIM GSM handset that can be used anywhere in the world.”

“We are offering visitors to this country much greater peace of mind in terms of their personal and financial security, services such as a full concierge offering, and emergency assistance - all in a one-stop, very affordable package,” says Natasen.

She adds that there are three Secure Solution packages. The Economy package costs R700, the Corporate package costs R950 and the Premium package costs R3 500.

Neo Africa says tourists will be able to receive their package immediately on their arrival in the country, at Neo Africa Secure Solution kiosks situated at major South African airports or at outlets and mobile delivery points around the country. Packages will be available from 1 June.