Device as Token: The Delicate Balance Of Security Versus Convenience

When it comes to adding payment protection in the constantly developing world of commerce there is a balancing act that needs to be performed. One of the reasons that passwords and PINs are being replaced with stronger methods of authentication goes beyond the simple idea of providing better protection, and that is the concept of invisibility: additional strong ID factors that add little-to-no friction to the actual transaction.

As mobility takes a stronger hold on the general consuming public, and smartphones begin to lock themselves behind biometric sensors, the near-ubiquitous devices become identifying tokens with easy to use interfaces. This concept can manifest in many ways, but one that is becoming more and more common is to use proximity to authenticate the use of a card.

Yesterday, predictive analytics software company FICO announced the availability of its proximity correlation service meant to add payment protection to credit and debit card transactions. It’s called the FICO Proximity Location Service and it uses a mobile device based authentication factor to add additional security to ATM and point of sale card transactions.

By measuring the proximity between a FICO registered phone and the point of transaction a payment can be blocked or allowed to continue. This service performed well in trials, specifically in the area of preventing false positives on international transactions. According to FICO, the new low-friction solution reduced the number of wrongly investigated fraud cases by about 70 percent and the Proximity Location Service is expected to be deployed in several UK banks.

“Banks are trying to perfect a tricky balancing act – protect customers without causing undue frustration for cardholders who travel or who use their cards in new locations,” says Gabriel Hopkins, senior director, Product Management at FICO. “Proximity correlation adds a powerful new tool that can help banks eliminate a great source of frustration for their customers who travel. With this service, cardholders can use their cards in other countries with significantly lower risk of being declined.”