MasterCard plans to launch new biometric technology for verifying customer identities during online shopping transactions in the coming weeks with merchants and banks. The company has been testing facial and fingerprint recognition software, called Identity Check, in the Netherlands, Canada and the U.S., as a way to combat growing online fraud.
As Visa and MasterCard have pushed merchants and consumers to switch from credit cards that use magnetic strips to cards embedded with a computer chip that creates a unique code for each transaction, retail fraud patterns have shifted. For the 33% of MasterCard merchants that have adopted chip technology, fraud from counterfeit cards has dropped by 54%, said Ajay Bhalla, president of enterprise security solutions at MasterCard. Criminals have regrouped to focus on internet transactions, where no physical card is used.
“Fraudsters have a business model, too, so we see [fraud] moving to ‘card not present’ transactions,” Mr. Bhalla said.
In online transactions using Identity Check, the shopper submits a selfie or fingerprint via a mobile app from MasterCard that authenticates the image. Consumers shopping via laptop or desktop computer would receive requests for the biometric data through text message sent to their smartphones. “The hypothesis is that everybody’s carrying a mobile phone,” Mr. Bhalla said.
The technology is part of a larger effort at MasterCard to fight online financial fraud that includes a transaction-monitoring system that uses artificial intelligence to detect unusual activity and alert banks and merchants. Banks are also experimenting with technology to stop online crime.U.S. Bancorp plans to launch a service that allows customers to choose to have their cellphones tracked so the bank can check phone location data against the location of a pending credit-card transaction. A match is one indication the purchase is legitimate. American Express, Visa, Wells Fargo & Co. and others are testing eye scans, voice recognition and other biometric technology to better secure transactions.
MasterCard announced the Identity Check technology last October and has been testing it with ABN AMRO Group NV in Amsterdam, Bank of Montreal in Canada and First Tech Federal Credit Union in Palo Alto, Calif.