A number of banks have reported seeing a growing incidence of fraud on Apple’s mobile-payment service as criminals exploit vulnerabilities in the verification process of adding a credit card, according to people familiar with the matter.
WSJ reports that Banks are tightening the verification process in an attempt to curb the fraud.
Cherian Abraham, a payment expert who works with banks and retailers on mobile-payment strategies, brought to light the issue in a blog post in late February. He said fraud “is growing like a weed, and the bank is unable to tell friend from foe.”
Abraham said it’s not “an anomaly” to see fraud accounting for about 6% of Apple Pay transactions, compared to about 0.1% of transactions using a plastic card to swipe. He noted that fraud rates vary by issuing bank.
Apple has declined to comment on the fraud rates, but said Apple Pay is “designed to be extremely secure and protect a user’s personal information.
Stolen identities and lifted credit card numbers have been a problem for a long time in e-commerce transactions, where the rates of fraud are higher than in-store credit card purchases.
Via WSJ
