Fraud is the biggest threat to the credit card payment industry. Credit card related fraud comes in various forms:
- Outright physical card theft and Impersonation
In every case, the criminals always seem to be a few steps ahead of those who fight to eradicate fraud. They tend to use the same technology used to fight them to steal card data. They then use even more enhanced approaches to hack into information databases to get hold of card user information.
Some antifraud efforts have been more successful than others. Among the more successful antifraud measures in the contactless payment world is the use of Dynamic CVV codes.
Understanding the CVV technology
Card Verification Value, CVV is a 3- 4 digit number on a credit or debit card. It is often used for identification purposes in addition to the card’s embossed number on point of sale (POS) devices. The POS scanning device checks the encoded numbers within the card’s magnetic stripe, while the card verification value or CVV becomes particularly useful for Internet or telephone-based transactions where the user cannot swipe the card on a POS device to be read.
A user can often relay the card’s 3 to 4-digit CVV2 or CVC2 code printed on the back, in the card’s signature panel for the required identification. Notice that this method has allowed room for increased cases of card-not-present fraud.
So, with Near Field Communication (NFC) payments, major card brands have initiated the dynamic CVV as a measures to reduce the risk of fraud and sustain better consumer confidence in this new burgeoning payment technology.
How dynamic CVV technology works
The big brands that include Visa and MasterCard build dynamic CVV codes into the contactless cards. This security measure basically attaches a unique algorithm to a card. This way, a new security code is created after each contactless transaction.
Whoever obtains the card can therefore not use it for any kind of sham contactless transaction since it would be impossible for him or her to determine the card’s unique algorithm – the ever shifting security codes.
These dynamic CVVs however have no help against traditional point of sale transactions. If your business relies on a traditional POS and not an NFC technology then you may want to consider opening a high risk merchant account with a high risk ecommerce processing solutions provider like EMB.