This article previously ran on CUInsight.com.
Mobile card controls and alerts apps are rapidly making their way into smartphones everywhere, allowing consumers to dictate exactly how their credit and debit cards can – and can’t – be used, all from the convenience of a mobile device.
According to a new survey published by Mercator Advisory Group and sponsored by CO-OP Financial Services, “U.S. consumers are increasingly attuned to the security vulnerabilities of their payment cards and are expanding their use of alerts.”
And by a fair margin. In fact, the study has found that 60 percent of U.S. mobile phone owners today actively utilize fraud alerts from banking or credit card providers, versus just 38 percent in 2014. And usage is even higher among millennials – with 72 percent of smartphone owners age 18 to 34 reporting that they use fraud alerts.
While industry research reveals that usage of mobile security apps can reduce fraud by up to 40 percent, Mercator’s study shows that interacting with consumers in this way can also increase their overall engagement with a financial institution’s brand.
As noted in the findings, “Ultimately, the card control user is likely to become the highly sought after prize for bank and credit union card issuers – a potential long-term customer for whom the issuer’s card is top of wallet.”
And the functionality of alerts can be extended well beyond the realm of fraud prevention to encompass billing reminders and personal financial management applications as well.
Turning Cards On and Off
While users of mobile security apps have a rich array of features at their fingertips, Mercator emphasizes that the one feature they should use the most is the on/off control switch. This feature allows the cardholder to temporarily disable a credit or debit card by touching a “switch” on the phone, a practice that is recommended whenever a card is not in use.
Cardholders can also elect to receive authorization requests for all transactions – or only those that meet a certain criteria, such as purchases from specific product categories, merchants or merchant types – or from merchants located outside a designated geographic area, such as the cardholder’s hometown.
Transaction Alerts Provide Real-Time Warnings
Another valuable security feature is transaction alerting, which sends cardholders real-time notifications about account activity.
For example, alerts can be set up for transactions that exceed a specified spending limit, or when the number of transactions in a given time period reaches a threshold. Notifications can also be sent when another cardholder, such as a spouse or child, uses the card, or when a transaction is attempted at a merchant that has been blocked.
While mobile security apps can make detecting fraud virtually effortless, they also come in handy when a member misplaces a card. When this happens, the card can simply be turned off until it is located – eliminating the time, cost and inconvenience involved in issuing a replacement.
Uniting Millions in the War on Fraud
Over time, Mercator projects that widespread adoption of mobile card controls and alerts could significantly reduce fraud on a grand scale.
The report concludes, “Card controls provide multiple benefits by enlisting potentially millions of cardholders in the fight against fraud. Every industry stakeholder – whether software developer, card network, issuer large or small, merchant, merchant acquirer, or card processor – can realize major gains, but only by making the provision of card controls one of its key priorities.”
According to CO-OP CEO Todd Clark, “Fraud is becoming more of a team effort between consumers and their financial providers. We want to work with our client credit unions to mobilize a member army to recognize and fight fraud sooner.”
To learn more about how to optimize today’s most advanced security innovations, download CO-OP’s newest eBook here.