The Right Tools for Combating Credit Card Fraud
In today’s tech environment, security is at the forefront of many people’s minds. That is especially true when finances are involved.
To be sure, consumers are not irrational when they worry about the integrity of their financial information.
Enough platforms have been hacked to make just about anyone nervous.
For example, in 2013, Target, a mainstream multipurpose retailer, endured a network hack that compromised 40 million customer credit and debit cards. Unfortunately, this is just the tip of the proverbial iceberg. Other retailers including Home Depot – 57 million credit cards, eBay – 145 million cards, and TJ Max – 95 million customer accounts, were each compromised at an astonishing scale.
In fact, for many consumers, data compromise feels more like an inevitability than a risk. This is not a helpful sentiment for anyone. As more people are shopping online and exposing valuable financial information in the process, a sense of security must be a prerequisite if this trend is going to continue to proliferate.
Passwords Don’t Protect Much
The digital ecosystem is intended to be secured by personal passwords that guard users accounts from unintended activity. As several consumer trends indicate, this system is lacking, to say the least. Despite an abundance of password managers and other tools to help users best fortify their accounts, an astonishing number of people choose obvious and ineffective passwords. The two most egregious choices “123456” and “password” rank first and second in the most popular password choices according to PRWeb’s annual survey on the state of personal passwords.
As a result, biometrics are receiving a lot of attention as the natural successor to the traditional password system. Apple’s iPhone has included a fingerprint sensor since 2013, and most smartphone companies include this feature as well. Last year, Apple made waves when it introduced Face ID, a biometrical password that uses a 3D map of a person’s face to access the device, rather than a fingerprint or a numeric password.
More than a third of the entire global population already owns a smartphone, and adoption rates are spiking as devices become cheaper and internet access becomes more ubiquitous. Therefore, biometrical data is already making considerable headway as a replacement for traditional passwords.
A New Kind of Password
Perhaps most importantly, the broad adoption of a Web Authentication standard means that biometrics can be used for more than just accessing devices. This industry standard, which is already adopted by Microsoft and Google, allows websites to eliminate passwords altogether in favor of biometric input.
In addition to being incredibly convenient (Just think, no more password management!), it also dramatically increases security on the web. As Engadget explains, “It’s about more than convenience. That same uniqueness reduces the chances that a password compromised on one site can be used on another — intruders shouldn’t have free rein with your accounts even if they punch through a site’s defenses.”
With so much internet activity related to financial transactions, this could be a huge deal for credit card holders. Using biometrics, a fingerprint or a face scan can authorize a sale, guard financial accounts, and protect against theft or fraud. Popular heist attempts like skimming and cloning, interception on delivery, and charge backs would be significantly less effective by altering the authentication landscape.
Centralized Networks Limit the Potential
While biometrics represent a critical next step for credit card holders, its benefits are limited when the the personal data that they secure is stored on centralized databases. Unfortunately, that’s the way most information is stored. Massive server farms that house unfathomable amounts of personal and financial information are sitting ducks that are vulnerable to an impending hack.
These facilities implement complicated and comprehensive security measures, but there is little deterrence for preventing motivated bad actors from trying to breach the network. The recent revelation that Russian operatives attacked and eventually infiltrated the U.S. energy grid demonstrates just how true this is. The Wall Street Journal reports that the hackers, “broke into supposedly secure, ‘air-gapped’ or isolated networks owned by utilities with relative ease by first penetrating the systems of authorized vendors who had trusted relationships with the power companies, said officials at the Department of Homeland Security.”
In short, with enough time and resources, hackers can infiltrate even the most fortified centralized databases.
Fortunately, just as devastating data breaches are reaching an all-time high, blockchain technology has arrived as a solution for secure data storage.
The Blockchain Makes the Difference
The blockchain is a nascent technology, but its competencies and capabilities should not be ignored.
For instance, the blockchain operates on a decentralized network, which shields it from many prominent attack methods, it is uniquely well-suited for facilitating data and financial transactions, and it’s enabling a plethora of innovative startups to pursue fresh solutions to prominent problems.
As Bridget Van Kralingen, head of IBM’s blockchain initiative, recently demurred when asked about the most exciting part of the blockchain’s development: “I could go on forever.”
Preventing Credit Card Fraud
When it comes to combating credit card fraud, the blockchain can be a differentiating factor for creating a secure infrastructure for securely verifying digital transactions.
The blockchain can facilitate a process that enables users to participate in the digital economy without presenting their personal or financial information to the companies they interact with. Rather, consumers can use tokens, references, or attestations to verify their identity and payment information.
This can be a critical component of fraud prevention. By replacing the most vulnerable component of the process, the blockchain is laying a secure foundation for financial transactions.
By all accounts, now is the perfect time for applying blockchain technology to the problem of credit card fraud. More consumers than ever before are turning to the internet to make purchases – last year’s holiday season saw online sales outpace in-store purchases for the first time – but that landscape has never been more vulnerable.
Meanwhile, the vast proliferation of smartphone technology, biometric sensors, and blockchain technology makes it possible to secure the data that protects the transactions. A world without complicated passwords or compromised networks is at our fingertips, and blockchain technology makes that achievable.
About the Author:
Alastair Johnson is the founder & CEO of Nuggets. Nuggets is an e-commerce payments and ID platform. It stores your personal and payment data securely in the blockchain, so you never have to share it with anyone – not even Nuggets.