The Ups and Downs of Mastercard’s Smartphone Security Plan

Mar 14, 2014
EARNS MASTERCARD

Mastercard recently announced plans to beef up security to make it more difficult for someone to use a stolen credit card. The company they are collaborating with, Syniverse, looks to help strengthen security by making it virtually impossible for an individual’s credit card to be used outside a certain distance of his smartphone. However, while this sounds like a promising idea, there may be a few drawbacks.

The idea of wanting to heighten credit card security is not new, but MasterCard’s most recent plan is a bit different because it involves users’ smartphone “geolocation” to gauge where the cardholder is in order to allow or deny the purchase. For instance, if the cardholder’s phone pings in New Zealand and the card usage attempt in made in London, the attempt will be declined. As of right now, cardholders are supposed to call their issuer before leaving the country so that their itineraries can be given to the issuer’s antifraud systems. When the cardholders do not do that, they are more likely to have their purchases denied. The change in security and smartphone tracking will eliminate this step for travelers.

While this seems to be a step in the right direction on terms of international security over credit card theft, there are a few bumps in the road. The way this program is being set up, your mobile geolocation data will tell MasterCard that your phone is in the same country where someone is trying to use your card to make a purchase. If anything, the program loosens the fraud controls for the convenience of cardholders. Nevertheless, just think how easy it would be to subvert that. If your MasterCard were stolen at Moscow and then used to buy a TV in Saint Petersburg, MasterCard’s new geolocation effort would look and decide everything must be fine, because your phone is in Russia. This program also seems faulty in the case of a lost or stolen smartphone. While the majority of people will contact their service provider, it is not clear if Mastercard will need to be contacted in order to cease credit card tracking. Another risk is that your phone will only track and ping while it is turned on, so if you travel to Spain, turn your phone off, and then travel to France, you may not be able to use your card in France because your last know location was in Spain.

While Mastercard’s partnership with Syniverse is a great step for card security, there are still kinks in the program. However, these kinks, while they seem large, can easily be evaluated and fixed along the way. The easiest thing to do is contact your service provider and Mastercard, and let both know your itinerary in case of a lost smartphone or a smartphone that has not been turned on in your newest destination.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

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EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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