# Fraud Wars: How Can Biometrics Help Win The Card Fraud Battle?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2018-05-29
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Conquering Contactless Fraud: How Biometrics are Revolutionising Payment Security
Meta Description: Learn how biometrics like fingerprint authentication can combat lost or stolen card fraud, skimming, and card non-receipt fraud in the world of contactless
URL: https://financedigest.com/fraud-wars-how-can-biometrics-help-win-the-card-fraud-battlehtml

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_By **Lina Andolf-Orup**, Fingerprints_

Fighting fraudsters is a complex and ever-evolving challenge. As consumers change the way they pay, fraudsters change the way they steal. For banks to keep up, these new battles require new tactics to minimize [losses and reassure consumers](https://www.financedigest.com/irish-consumer-sentiment-dips-slightly-on-tech-job-losses.html "Irish consumer sentiment dips slightly on tech job losses").

The rapid adoption of [contactless payment cards has given rise to one such ‘new battle’, creating a new discourse surrounding contactless fraud](https://www.financedigest.com/the-importance-of-a-proactive-and-collaborative-approach-to-reducing-contactless-fraud.html "THE IMPORTANCE OF A PROACTIVE AND COLLABORATIVE APPROACH TO REDUCING CONTACTLESS FRAUD"). Whether it’s the digital pick-pocket [skimming on busy subways](https://www.independent.co.uk/life-style/gadgets-and-tech/news/contactless-card-theft-users-warned-to-watch-out-for-digital-pickpockets-a6879796.html), or spending sprees made on stolen cards, these headlines are making consumers think twice about tap & pay.

While contactless fraud has risen in [line with the rate](https://www.financedigest.com/uk-economy-almost-flat-lined-in-october-adding-to-rate-hike-doubts.html "UK economy almost flat-lined in October, adding to rate hike doubts") of use, it actually accounts for a pretty small percentage of total card fraud losses. However, with fraud fever spreading and prohibitive payment caps currently limiting genuine spending, the adoption and use of contactless cards is likely to plateau.

So, how can biometrics help conquer the new challenges presented by contactless card fraud? To illustrate, let’s look at how biometrics can directly mitigate the fraud ‘vectors’ (categories of fraud, if you like) that dominate contactless card misuse.

**Lost or stolen card fraud**

This encompasses any fraudulent use of a [card reported](https://www.financedigest.com/research-report-explores-the-id-card-printers-market-will-grow-at-4-cagr-by-2021-to-2031-persistence-market-research.html "Research Report Explores The ID Card Printers Market Will Grow At 4% CAGR By 2021 to 2031: Persistence Market Research") lost or stolen. Picture the commonly considered scenario:

You’ve lost your contactless payment card, its fallen into the hands of the [21st century’s](https://www.financedigest.com/taking-the-pain-out-of-payments-for-the-21st-century-worker.html "TAKING THE PAIN OUT OF PAYMENTS FOR THE 21ST CENTURY WORKER") Artful Dodger\*, and now its fuelling a five-payment spending spree at checkouts.

This is a relatable and common narrative that causes a [headache for both the banks](https://www.financedigest.com/analysis-u-s-banks-face-trillion-dollar-reverse-repo-headache.html "Analysis: U.S. banks face trillion-dollar reverse repo headache") and consumers. But with [biometric authentication](https://www.financedigest.com/behavioral-biometrics-simple-and-secure-way-to-authenticate-consumers-digital-identities.html "Behavioral Biometrics: Simple and Secure way to Authenticate Consumers’ Digital Identities"), this scenario becomes obsolete. While it’s easy to steal a piece of plastic, the card is useless without the right fingerprint, reassuring customers the use of lost cards is prohibited.

**Skimming and cloning**

This [falls under the broader category of counterfeit card](https://www.financedigest.com/card-spending-in-uk-falls-below-pre-covid-average-ons.html "Card spending in UK falls below pre-COVID average – ONS") fraud, where card details are used or stolen to either generate a fake card or be used without the card holder’s knowledge.

Criminals can use hacked [payment terminals to skim unsuspecting consumers’ contactless](https://www.financedigest.com/contactless-payments-spirit-willing-but-is-the-market.html "Contactless Payments: Spirit Willing but is the Market?") cards and charge them without their knowledge. This is [usually in a busy](https://www.financedigest.com/not-business-as-usual-for-g20-foreign-ministers-meeting-in-bali.html "Not ‘business as usual’ for G20 foreign ministers meeting in Bali") environment, such as a subway train, and attacks travellers who may have their wallet in their back pocket, for example. While it’s not proven how common this is, it is possible. And with a rise in RFID-blocking card sleeves and wallets to prevent this happening, its clearly causing concern. A concern that consumers are seemingly willing to pay around €10 or more for.

**Card non-receipt fraud**

This relates to cards that are stolen while in transit – after the bank sends them out, but before being received by the genuine cardholder. In this instance, the enrollment process (how your fingerprint is uploaded onto the card) is central to preventing this fraud type.

It’s unlikely there’ll be a one size fits all model for enrollment, whether [banks want customers](https://www.financedigest.com/canadian-banks-fighting-brokers-back-for-customers.html "Canadian Banks Fighting Brokers Back For Customers") to enroll in-branch or by using a complimentary app on a mobile device, or a dedicated self-enrollment sleeve, for example. However, this extra step of authentication in the [activation of cards mitigates the value](https://www.financedigest.com/tissue-cultured-date-palm-market-pegged-at-us-4-5-bn-value-pool-in-2027-import-export-activities-take-a-downturn-amid-coronavirus-outbreak-future-market-insights.html "Tissue Cultured Date Palm Market Pegged at US$ 4.5 Bn Value Pool in 2027; Import & Export Activities Take a Downturn Amid Coronavirus Outbreak: Future Market Insights") of a card caught on its way to its rightful owner.

**Fraudulent chargebacks**

This [type of fraud usually occurs when a cardholder buys something expensive with their card and then immediately reports](https://www.financedigest.com/xylooligosaccharide-market-size-share-and-trends-analysis-report-by-product-types-and-applications-forecast-to-2029.html "Xylooligosaccharide Market Size, Share And Trends Analysis Report By Product Types, And Applications Forecast To 2029") the card as lost or stolen, disowning the transaction and claiming money back from the bank. This generally features card [payments where PIN authentication](https://www.financedigest.com/the-key-trends-in-payment-authentication.html "The key trends in payment authentication") isn’t used.

This service is a great [safety net](https://www.financedigest.com/increase-in-investments-in-building-refurbishment-and-new-construction-activities-to-propel-demand-of-construction-safety-net-market-fact-mr-report.html "Increase in Investments in Building Refurbishment and New Construction Activities to Propel Demand of Construction Safety Net Market: Fact.MR Report") for consumers in instances of legitimate fraud, but false chargebacks are negatively impacting merchants and racking up costs for banks. With biometric authentication on a card however, cardholders are unable to claim that the card was used by someone else, as they are the only one’s able to activate it for in-store transactions.

**Trust in biometrics**

Biometrics can directly mitigate several fraud vectors and is the key to [securing contactless card payments](https://www.financedigest.com/contactless-payments-the-way-of-the-future-or-security-scare.html "Contactless Payments – The Way of the Future or Security Scare?"). Thinking more about the future too, combining contactless cards with proximity [services within mobile banking](https://www.financedigest.com/the-gmp-cell-banking-service-market.html "The GMP Cell Banking Service Market") apps could add another layer of authentication by proving the cardholder is in the vicinity of the payment. What’s more, by connecting a [biometric payment](https://www.financedigest.com/how-biometric-payments-are-tackling-financial-exclusion.html "How Biometric Payments Are Tackling Financial Exclusion") card to a PC or mobile device with a card reader/sleeve, or Bluetooth, or combining biometrics with dynamic CVV on cards, this could also play a part in solving online fraud, which currently accounts for the majority of illegitimate spending.

In the immediate future though, biometrics can empower [banks with the confidence to finally lift](https://www.financedigest.com/consumer-staples-banks-lift-uks-ftse-100-after-sharp-selloff.html "Consumer staples, banks lift UK’s FTSE 100 after sharp selloff") the pesky payment cap, offering its customers even greater convenience and promoting adoption. Crucially, biometric authentication offers a counternarrative to the fraud fears and brings trust to contactless cards.

To learn more about the power of biometric contactless payment cards, download our infographic [here](https://www.fingerprints.com/uploads/2018/05/fpc-smartcards-infographic-v2.pdf?utm_source=iseepr&utm_campaign=FraudWars_blog) or visit the Fingerprints website.

_\*A character and pickpocket in the novel Oliver Twist by Charles Dickens_

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![biometric-infographic](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/biometric-infographic-1736842685661-compressed.jpg)


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