US Bank uses Visa geolocation tech to reduce card declines

US Bank uses Visa geolocation tech to reduce card declines

US Bank is tapping technology from Visa that uses the geolocation capabilities of mobile phones to determine whether payment cards are being used fraudulently.

The opt-in technology is integrated into US Bank's mobile apps, enabling the location of a card transaction to be matched to the location of the user’s phone.

The bank says this means it can help ensure that transactions on customers’ cards are approved, minimising disruption and reducing the risk of fraud.

Clifford Cook, head, product and marketing, retail payment solutions, US Bank, says: "We’ve all experienced that embarrassing moment when your credit card is declined at dinner while on vacation because the bank thinks you should be at home in Minneapolis, but you’re eating dinner in Seattle.

"When your phone is on and you’ve opted-in for geolocation, US Bank can validate that the expense is legitimate and avoid customer frustration."

Comments: (15)

Marite Ferrero
Marite Ferrero - WWW.WEMBIX.COM - London 05 October, 2016, 09:12Be the first to give this comment the thumbs up 0 likes

Geolocation service is quite useful in North America where they still physically sign for their purchases. Here in Europe where chip and pin is dominant, it wouldn't be used as much.

A Finextra member
A Finextra member 05 October, 2016, 10:59Be the first to give this comment the thumbs up 0 likes

Great!  Now criminals will target your phone as well as your wallet!

Glad to hear that Chip and pin is really starting to get some traction in the USA now.

A Finextra member
A Finextra member 05 October, 2016, 12:18Be the first to give this comment the thumbs up 0 likes

Marite is correct,  this is another costly and probably slow service that is designed to plug holes left by  Visa and MC refusing to adopt chip and PIN in the USA, i suppose the time it takes to sign for your sale (or whilst the card is off with the waiter)  is useful to perform the geolocation check.  It makes you wonder about the cost of fraud and who is making money out of it?  obviously has to be switched off for CNP transactions.... on the web..... where a lot of fraud is taking place!   3D secure may help? 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 05 October, 2016, 19:42Be the first to give this comment the thumbs up 0 likes

IME, US consumers have lower tolerance to friction and higher expectation of superior CX compared to those in RoW. Kudos to Visa for coming up with just the right way to balance convenience with security for that market where EMV has stumbled and 3DS would be a conversion-killer.

Mitigating Fraud Does Not Pay The Bills

A Finextra member
A Finextra member 06 October, 2016, 12:57Be the first to give this comment the thumbs up 0 likes

You should see the friction Americans suffer when using cards outside the USA!!! I  think americans have reducing tolerance to data theft than they did.  Lets hope that there is a good 4G network, that your battery is working and that location based servicse are turned on when in the USA or roaming abroad! 

mitigating fraud 'does' pay Fraudsters bills and sponsors a lot of other illegal activities, it also enables lower fraud-prone banks to underprice their more flabby and complacent competitors....  In italy, drivers dont wear seat belts.... why should they -  they say they have great hospitals!

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 06 October, 2016, 13:57Be the first to give this comment the thumbs up 0 likes

Once upon a time, people using non-Chip credit cards issued by banks in USA did face friction while using them outside USA. However, going by first hand experience during the last 12 months, all that is history:

5 different countries in Europe, 3 different countries in Asia Pacific, ~150 transactions, only 3 declines of 3 US non-Chip credit cards.

Whether they read my above mentioned blog post or not, I'm glad that RoW merchants have realized that single-minded obsession with mitigating fraud is bad for business and have adapted themselves accordingly.

A Finextra member
A Finextra member 06 October, 2016, 15:32Be the first to give this comment the thumbs up 0 likes

Hmm  Mitigating crime is bad for society? ...... Police forces probably are an expensive and uneccesary evil soaking up tax payers money needlessly.  

Maybe the whole world should still be on mag stripe,  then the USA wouldnt stand out quite so much as the 'go to' country for skimmers.  Still the USA will be dragged kicking and screaming into the 21st century, EMV, Contactless and finally, maybe,  an end to the data breaches.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 06 October, 2016, 19:17Be the first to give this comment the thumbs up 0 likes

Sadly, EMV hasn't meant reduced fraud for US merchants. On the contrary, as the two merchants quoted in this FORTUNE magazine article allege, "...despite upgrading to the appropriate terminals, and following the other upgrade rules stipulated by credit card companies, B & R and Grove incurred total losses of close to $10,000 for 88 chargebacks since October 2015. By comparison, both companies had a total of four chargebacks over the same time period in 2014."

So it's equally likely that the RoW will be dragged, kicking and screaming, into non-EMV and non-3DS alternatives that reduce friction and improve conversion rates - in other words, to make credit cards do what they're meant to do, namely, enable business and drive revenues. We're already seeing early signs of it e.g. India has moved from PIN+Signature to PIN-only to no-PIN-no-Signature regime for transactions below INR 2K.

Marite Ferrero
Marite Ferrero - WWW.WEMBIX.COM - London 06 October, 2016, 22:14Be the first to give this comment the thumbs up 0 likes

Commenting on Ketharaman's post:  I haven't read the FORTUNE magazine article but based on the EMV liability shift and chargeback rules, one reason a merchant who has deployed EMV terminals would still incur high chargeback rates is if the merchant still processes payments with signature. If EMV liability shift isn't implemented in North America as they did in Europe, then I agree there is no point or incentive to deploy EMV terminals over there.

With EMV liability shift, the chargeback cost and fraud is shouldered by the entity in the payment flow that presents the weakest link. For example, if the merchant has an EMV terminal and the issued card does not have chip and pin, then the Issuing Bank is responsible for the fraud and chargeback.

A Finextra member
A Finextra member 07 October, 2016, 09:04Be the first to give this comment the thumbs up 0 likes

Well said Marite,  I dont get how PIN entry is a problem for merchants, in the UK Merchants are saving a fortune through the use of Cardholder activated and managed checkouts, its a smooth experience now moving to Contactless with the option for an intermittend PIN check when needed.  PIN is verified offline or Online... depending on merchant and acquirer controls.....   US Consumers believe that when they sign the LCD pad that somehow this is 2nd factor verificaition.  They believe that the Chips on Amex cards do something, The ROW will accommodate the USA, but this just seems like a Loose - Loose route to follow 

A Finextra member
A Finextra member 07 October, 2016, 09:07Be the first to give this comment the thumbs up 0 likes

oops loose - loose,  AND lose-lose!! (spell check hassle)   :-)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 07 October, 2016, 13:36Be the first to give this comment the thumbs up 0 likes

@MariteFerrero: USA is indeed on Chip+Signature. That situation is outside the control of the said two merchants. Under this regime, we're all in agreement that "...there is no point or incentive to deploy EMV terminals over there." Which is exactly my view. That makes the case to stop EMV altogether OR implement Chip+PIN (which is not going to happen anytime soon) OR find other ways to balance convenience with security, as I thought USBank has done well with Visa geoloc technology.

Marite Ferrero
Marite Ferrero - WWW.WEMBIX.COM - London 08 October, 2016, 12:25Be the first to give this comment the thumbs up 0 likes

Ketharaman: I just read the FORTUNE article. From what I understand, EMV in North American is with the Liability shift. The merchants in the article are still liable despite using EMV terminals because schemes need to certify these POS's first before merchants are covered by the Liability shift. Sounds like there is a backlog of scheme certification work. EMV in North America will get there eventually. 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 08 October, 2016, 20:15Be the first to give this comment the thumbs up 0 likes

@MariteFerrero: Something else could equally well get there eventually - EMV is 20 year old technology, there's nothing sacrosanct about it. Besides, the plaintiffs have insinuated that the certification may never happen:  

“Class members such as the plaintiffs here, could not timely comply with the standard, no matter what they did, because the Defendants refused to, or were unable to, ‘certify’ the new equipment by the deadline – or, indeed, ever,” the complaint reads.

A Finextra member
A Finextra member 11 October, 2016, 11:26Be the first to give this comment the thumbs up 0 likes

So is this cock-up or conspiracy?

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