Recently, Visa Europe announced a partnership with ValidSoft Limited, a fraud-prevention specialist, to use its VALid authentication platform and VALid-POS solution, in detecting credit card fraud. The ground-breaking feature of the new service is that it uses a mobile phone's location in conjunction with where a Visa credit card is being used to identify, in real-time, possible fraudulent transactions.
Visa Europe's Solution, Compared
With the new Visa Europe/ValidSoft partnership, the new service can detect in real-time whether a card holder's mobile phone is near the ATM or merchant terminal where a transaction is occurring. If not, an alert is raised. It's unclear whether or not the transaction will process, however, or what would happen if you left your phone at home, had a poor signal, etc.
As noted above, we reported on a U.S.-based solution in October, an optional freemium-level service called PinPoint. Thanks to Location Labs' partnership with all major U.S. carriers, and Finsphere's fraud detection service, the service can identify when credit card transactions and phones are geographically far apart from each other. If so, an alert is raised and a text message and/or email is sent to the end user to confirm the transaction. Visa Europe's solution would likely work in a similar fashion.
The difference between the two is that one involves a fraud detection service partnered with a location provider, who has in turn partnered with carriers, (PinPoint), while the other involves a fraud detection service partnered with a credit card issuer.
Jason Finkelstein, VP Developer Platform at Location Labs, had this to say about Visa's new offering: "at a glance, the ValidSoft fraud detection solution is similar to our partner, Finsphere; however, Location Labs provided Finsphere with our location platform which they leveraged to access users via our carrier relationships in the U.S. It is unclear whether ValidSoft is also working with carriers or a location platform with their VALid-POS technology."
Still, Finkelstein was positive about the development, saying "we dont see ValidSoft as a competitor to Location Labs in fact, we would consider them an ideal company to potentially partner with in the future."
Start of a Trend?
There's clear potential for the development of location-based services that go far beyond the "check-in," navigation and mapping, it seems. According to Gartner's Avivah Litan, the analyst firm believes Visa Europes move is the start of a trend, and that "many more card companies and banks will follow by adopting this technology."
Gartner believes these services "have great value when it comes to protecting payment accounts and preventing fraud," said Litan, "and that many more banks and card companies will adopt them once they see the value."