HSBC introduces new credit card fraud prevention technology

By Reno Charlton Staff Writer 4 February 2009

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HSBC has unveiled new plans to cut down on fraud, but will it be a help or a hindrance as many cardholders could face being left stranded at the tills with no way to pay (or worse stranded overseas).

According to HSBC Chip and PIN was successful for 18 months; that was until the fraudsters got to grips with the new technology and worked their way around it.

With the creation of new sophisticated card readers by fraudsters, camera's set up over ATM machines to catch PIN number entries, and even PIN input devices switched for fraudulent capture ones, it's no surprise that the banks are having to think a little more "outside the box" to try and stop the fraudsters in their tracks.

Fraud has also continued to increase and risen by 14% in the first half of 2008, with many new tactics and ploys being used to try and swindle unsuspecting cardholders out of their cash.

So what's HSBC's answer?

The new fraud prevention scheme from HSBC will involve every single credit card transaction being closely scrutinised for signs of fraud.

The new scheme could certainly help to cut back on the rising levels of credit card fraud. However, it also means that people making legitimate credit card transactions may find that their transactions are also being scrutinised.

Previously, HSBC (as with other card providers offering active fraud monitoring) checked around a quarter of all credit card transactions and flagging up any particularly obscure ones.

However, the new software implementation at HSBC will now mean that every credit card transaction made with a HSBC credit card will be screened in real time and a decision on whether to allow the transaction to complete made in a fraction of a second.

As with any new software implementation however, it's bound to catch some legitimate transactions as well as fraudulent ones.

Bart Patrick of SAS UK, who are providing the new software system for HSBC said: "When you put your card in the machine it's carrying out an automatic check against your pattern of normal use - and making a decision about whether that is real or fraudulent."

Warning for travellers

People travelling abroad are likely to be affected the most and anyone who is going abroad is being strongly advised to make sure they not only tell their credit card provider where they are going - but also to make sure they have a back up method of payment in the form of another card issued by a different bank, immediate cash and travellers' cheques.

Sean Tipton from ABTA (the travel agent's trade body) advised travellers to: "Take a range of payment methods. Take cash for immediate expenses, take two cards, preferably from different banks and take travellers' cheques as well for extra security if it goes disastrously wrong."

Official back up

While it is easy to question the real suitability of using automated software to query every single credit card transaction, industry officials are backing the new scheme and highlighting the importance of reducing fraud over the mostly slight annoyances of having a credit card transaction cancelled.

Mark Bowerman from APACS said: "If we as customers expect banks to do something about this we have to expect that from time to time we'll be in a shop and the transaction will be queried or card declined."

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