The passive role of Banks in handling the banking Frauds and lack of penal mechanism against merchants, who accept and encourage such fraudalent transactions, is a serious fetter for safe payment ecosystem. What is the solution?
One can reduce one's risk for credit card fraud with good credit card safety habits.
As per research, a safe payment and monitoring system of a bank can significantly reduce credit card fraud. The second major factor is the financial literacy of consumers.
This is also a "market" solution. WHO is at risk or suffers loss from such activities? THEY will be the drivers for control or alternatives. The 'banks' will be involved only in so far as it improves their own profitability. Or, for the same reasons, they may even be complicit in some schemes.
Additional Factor authentication like the PIN and OTP's are extremely important. With introduction of 'Tap and Pay' kind of transactions , risk has increased. Transactions which only require presence of card and not PIN should be limited to Rs. 5000 PER DAY. And whether the customer wants to have Wi-fi payments enabled should be left to the clients. Banks by default give cards that are Wi-fi enabled. This is a wrong practice. Wi-fi enable cards should be issued only upon request by the clients, SHOULD NOT BE A DEFAULT AND THE ONLY OPTION.
It has been seen that most of the credit card frauds were due to phising. Where someone impersonates as a bank executive or employee of a company and calls to inform you that you have won an lottery amount or your card has been blocked for which they require credit card no, pin, and otp sent on your registered mobile number. This is the most popular method of credit card frauds nowadays. However this can be prevented by adding an extra layer of security by the banks. The transactions which requires entering of pin must be limited to a nominal amount. The bank must place a scrutiny on the transactions done by credit cards. The banks should assist the customer if a credit card fraud is done by complaining to the concerned authorities. The banks must create awareness among their customers to be aware of how to avoid fraud.
The central bank which is the main regulator in the financial sector should come up with a proper risk management framework that will be able to address new threats resulting from new emerging technology that hackers and fraudster are using in respect to electronic payment. Financial literacy is also a key player to combat this problem.
Customer awareness program could solve such problem. If bank and customers collaborate, then fraudulent will be vanished.
The question asked has within it the solution seeking for, which is, the Banks need to move from 'passive' to 'active' mode of handling fraud'...
As digital payment channels have increased, so have the routes that criminals can use. And now that banks are moving towards Open Banking, the number of routes available are about to multiply. So the banks are likely to face a new set of challenges in terms of detecting and preventing fraud. After all, they are liable for the losses.
An effective fraud management platform, analyzes the individual customer’s behavior as well as the context of every transaction. It then compares the results with the existing behavioral patterns to detect anomalies.
As criminals are using sophisticated technology, it is increasing banks’ exposure to complex types of frauds. Against this troubling background, banks should deploy a platform that uses cognitive computing and predictive modelling for real-time fraud prevention.
The foremost consistent, best-turned approach for recognizing rules and design of action that can help detect frauds or a financial crime is big data analytics and data mining techniques since it is the leading strategy to recognize similitude between individual or bunch behavior recognized from numerous sources and cross-checking value-based information behavior.
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