Solution in sight for CNP fraud


Solution in sight for CNP fraud


Online resellers blighted by cardholder-not-present (CNP) scams have finally been thrown a lifeline via a credit card that generates a unique code each time it is used and is required before a transaction can be completed.

The technology, which was developed by Emue Technologies and Innovative Card Technologies in 2007, has been the subject of numerous worldwide trials - currently with 500 staff at Deloitte - and could hit the High Street next year.

The Visa Emue has a keypad and LCD screen embedded into it and allows users to enter their PIN and generate a one-time pass code.

"This will help in the fight against CNP fraud in two ways," said Sandra Alzetta, senior vice president for innovation at Visa Europe, "firstly, as the one-time code generated is for a specific transaction, once used it cannot be used again".

"Secondly a fraudster would need to be able to get hold of a card and know the person's PIN in order to commit fraud," she told MicroScope in an e-mail interview.

The field trials are due to conclude at the end of the year but Alzetta said it was down to the banks to decide if and when they will offer Emue to cardholders. Visa is waiting for feedback from consumers and corporations.

In the last four years CNP has grown exponentially and now accounts for more than half of all credit card fraud in the UK, made worse by the introduction of chip & PIN which deterred cardholder present cons.

However, as the banks were not liable for CNP fraud - it is the merchants who are charged back when a deception is uncovered - many in the channel have suspected there was not the same level of appetite as with chip & PIN to tackle the issue.

When asked why Visa had not moved more quickly to address CNP, she said: "It is our job to stay one step ahead of the fraudsters and I think this new card achieves this."

The concept was certainly interesting, said Sandra Quinn, director of communications at the Association of Payment Clearing Services (APACS).

"We are still some way off seeing these on the High Street, Visa has to tie in the different banks to ensure they issue them," she said, adding she suspected they would emerge next year.

Etailers have to perform numerous checks to ascertain that a customer is genuine including matching the delivery address to the cardholder.

"Anything that helps reduce the number of checks we have to do and the cost of administering them would be very welcome," said David Gould, commercial director at

Huddersfield based online dealer was the victim of CNP fraud when it first set up in business and has been calling for help from the police and the banking industry for years.

Nick Glynne, managing director at the company said this initiative was "well overdue" and he urged the channel to lobby the banking sector to transform the pilot into a full blown scheme.

"Just as chip & PIN technology eliminated cardholder present fraud this could completely do away with CNP," he claimed.

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