LOUISVILLE, Ky. (February 25, 2010) – The prevalence of identity theft and transactional fraud has made many Americans question whether or not traditional credit cards are the safest way to spend. While credit is an integral component to our nations economy, the current economic state has caused many consumers to seek out alternative means of money management. One of the fastest growing available options is the prepaid debit card.
Also referred to as a stored value card or gift card, the prepaid debit card has enjoyed a recent boost in popularity. When compared to traditional credit cards, the consumer interest is easy to understand: prepaid debit cards are simple, reloadable tools with which consumers can manage their own money instead of borrowing from an institution.
The prepaid debit card is growing in popularity and will soon become a mainstream alternative for consumer financial management. In this article, well discuss key security concerns of prepaid debit cards and how you can take steps to further protect your business and your customers while supporting the use of prepaid debit cards as they continue to grow in popularity as a method of payment.
Unlawful Funds Transfers
The ease of use and lack of identity protection on most prepaid debit cards has led them in the past to be used as tools for criminal transportation of funds, both domestically and internationally. For this and other security reasons, prepaid debit cards may be subject, now or in the future, to revised government regulations. Your business will need to be prepared with an up-to-date federal compliance program, including procedures for Bank Secrecy Act (BSA)/Financial Crimes Enforcement Network (FinCEN) reporting.
While most mainstream prepaid cards are activated using a secure PIN code that enables the carrier to conduct safe transactions, the level of security featured with the card varies wildly between providers. However, pending regulations may standardize prepaid security. Provisions of the Credit Card Accounting Responsibility and Disclosure Act of 2009 call for FinCEN regulations in regards to the prepaid card distribution process. In addition to federal compliance procedures, you should consider implementing a system of identity verification that addresses the customers using a prepaid debit card, especially those without a security PIN, until a standardization of prepaid security goes into effect.
Prepaid debit cards are popular for their anonymity, as consumers are now understandably concerned about the safety of their identities. Prepaid cards are also popular because transactions can be conducted successfully online or over the phone with businesses that accept popular brands of credit cards. For online businesses, especially those in the global marketplace, it is essential to employ some method of identity authentication, domestic or international, in order to protect against online business internet fraud through the use of prepaid debit cards.
Electronic Verification Systems, an industry leader with more than 10 years of data provision and fraud prevention experience, specializes in integrating identity verification and authentication procedures into established business security structures. If youre concerned about staying compliant and secure as prepaid transactions become more commonplace, we can help. EVS can implement a comprehensive identity verification or authentication program that blends seamlessly into the end-user experience for the very best in security and customer satisfaction. Contact us today at electronicverificationsystems.com.