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Visa launches mobile location service to cut declined card payments

13 February 2015  |  15434 views  |  8 Woman with shopping bag

In an effort to cut unnecessary purchase declines, Visa is set to start identifying cardholders when they make purchases on their travels through mobile phone geo-location data.

Visa estimates that issuing financial institutions spend hundreds of millions of dollars annually to manage customer service calls related to pre-travel requests and to research declined transactions.

To tackle the problem, the card giant is now working with specialist outfit Finsphere to get an analysis of account holders' device location data, which is then matched with the transaction location in less than a millisecond.

The new service will be offered to US card issuers from April. Customers will then be able to opt in through their bank app. Visa claims that its offering could slash the number of unnecessary declines by as much as 30%.

Mark Nelsen, SVP, risk products and business intelligence, Visa, says: "Through Visa’s Mobile Location Confirmation service, we’re enabling more precise fraud monitoring, which creates a better payment experience for travelers, assists merchants and reduces unnecessary operational costs for financial institutions."
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Comments: (8)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 13 February, 2015, 11:24

Great feature. But hope issuer banks allow customers to enter an alternative mobile # while setting it up for overseas trips. Otherwise, this feature won't solve the problem for many people who tend to use alternative SIMs / handsets while traveling abroad to escape high international roaming costs / CDMA-GSM network incompatibilities.

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Ewan MacLeod
Ewan MacLeod - Royal Bank of Scotland - London | 13 February, 2015, 11:59

It depends on the lookup technology in use -- if, for example, they're able to use the HLR ("Home location register") belonging to the relevant mobile networks, they could look to see where my phone is. As long as my phone is connected to a network in France (with data switched on or off), you'd be able to tell I was there. 

Roaming costs are still an issue for many customers, but for me it's reasonably cheap or free for most of Europe and America, so I would really like this technology to work! 

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A Finextra member
A Finextra member | 16 February, 2015, 07:30

This should be a great feature! I personally felt the need of it when I travelled to another state within USA. My card transaction was initially declined becuase within couple of hours it was swiped across states. My facebook ID already had my updated location which could have confirmed my travel but issuers were not using it.

I wish this feature will be exhaustive and factor in all possible opportunities to trace the cusotmer location and reduce the declines!

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 16 February, 2015, 08:07

@Anon: Interesting option. Can you please throw some light on the mechanics of how you authorize the transfer of your location info from FB ID to issuer? 

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A Finextra member
A Finextra member | 16 February, 2015, 09:01

So, Visa are adding geolocation technology to aleviate the not inconsiderable issues that cardholders face due to the fact that magstripe cards are very very easy to counterfeit.  Isn't this yet another case of yet another band-aid for a last century technology, at yet more cost?

How different the world would be now if the US had adopted chip technology with the rest of us.

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Jim Wells
Jim Wells - Wellspring Consulting International - Fort Lauderdale | 16 February, 2015, 13:54

Long past time for Visa (and MasterCard) to stop wasting time, resources & cardholder patience trying to substitute mobiles for payment cards instead of using mobiles to secure transactions made with cards. The former has always been a novelty & a solution looking for a non-existent problem.  The latter has been an opportunity to ensure that a payment card is being used in the same local as an associated mobile device.

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A Finextra member
A Finextra member | 16 February, 2015, 14:36

But if you can be 100% sure that the card presented is a genuine card, then it's either with the rightful owner or it's been stolen.  The problem with magstripe is that if a card transacts at 13:00 in London and then again at 13:17 in New York, it is impossible to tell which (if either) was the real card.  That isn't the case for a chip card: it won't appear in two places at once so you don't need to differentiate by geolocating the cardholder.  

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Jim Wells
Jim Wells - Wellspring Consulting International - Fort Lauderdale | 16 February, 2015, 14:45

David, precisely my point. Its likely that only 1 of the 2 transactions you describe would be made in the same locale as the associated mobile device. The mobile adds the all important, out-of-band, 2d level of authentication that has been missing from the payment card biz. 

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