Mobile phone location technology fights card fraud

Ericsson's service checks to see is a person's mobile phone is in the same country as where a card transaction occurs

Ericsson is courting major banks with a security service the company thinks could cut down on credit card fraud as well as eliminate an inconvenience for travelers using cards overseas.

Banks are increasingly blocking credit card transactions in certain high-risk countries due to increasingly levels of fraud. A business traveler who lives in the U.K. but goes to Russia can likely have a transaction rejected if the person hasn't informed the credit card company of their travel plans. It's embarrassing and inconvenient.

Ericsson's IPX Country Lookup service uses a person's mobile phone to provide a confirmation that a person is actually in the country where the transaction is carried out, said Peter Garside, U.K. and Ireland regional manager for Ericsson's IPX products.

For the service to work, Ericsson's technology must be installed on a mobile operator's network. Once installed, Ericsson will pay the operator a "small fee" every time a bank wants to verify a certain transaction by one of their customer's mobile phones, Garside said. Ericsson will then put a margin on the lookup fee and charge that to banks, he said. The lookup fee hasn't been set yet.

Garside said that Ericsson has figured out how to extract the location information from operators worldwide. The technology only identifies what country a person is in and not where they exactly are in that country. It only works for GSM networks.

To allay privacy concerns, Ericsson is recommending that the banks should get consumers' consent prior to using the transaction verification service. Once a person's approximate location has been passed onto the banks, that data will not be held any longer, Garside said.

The service will work even if someone's phone is off, but as long as they've turned the phone on at least once when they're in a new country. Mobile phones will register with the local operator when turned on in a different country, so Ericsson will be able to query the last known location.

The service comes out of Ericsson's IPX product line, which enables third parties to bill for ring tones or other content via mobile networks.

Garside said operators won't incur any costs to integrate the service into their networks and can make money from the location information they hold. "The operators are sitting on some valuable assets," Garside said.

Banks will be able to set their own policies around the lookup service. For example, a bank may decide it only wants to pay a lookup fee for card transactions that occur in Romania and a few other countries.

Ericsson's technology could be appealing to banks, which are facing ever-increasing levels of cross-border ATM fraud, said Peter Welch, an independent banking analyst who was briefed by Ericsson.

Close to 40 percent of the fraudulent transactions performed with U.K. cards in 2007 were done overseas, according to information published by APACS, a U.K. payment card trade association. Total fraud amounted to around £535.2 million (US$845 million).

The U.K. as well as most European countries now use the chip-and-PIN (Personal Identification Number) cards, which contain a microchip. Consumers must enter a four-digit PIN to complete a transaction, which is verified by the chip. But thieves who steal card details can create cloned cards and use them in ATMs in other countries whose cash machines to not verify that a chip is present in the card.

Bank customers would likely agree to opt-in to the service, especially it reduces the frequency with which overseas card transactions are denied, Welch said.

"I would think there is enormous potential for it," Welch said.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags mobile phonesCredit card fraud

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Jeremy Kirk

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?