How Financial Institutions Use Technology to Protect Customers

By: Amanda Atcheson is Product Marketing Manager for CO-OP Financial Service

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In the 1980s and 1990s, credit cards were processed manually, with receipts using carbon copies for the retailer and input into a keypad later. This transitioned into a simple magnetic swipe through a keypad, with the swipe containing account information. However, while this method maximized efficiency and ease-of-use, it opened the door to a number of fraud possibilities. From unscrupulous retail employees to card data skimmers planted on keypad readers, fraud is a constant issue with credit cards. Fortunately, banks and credit unions have come together to push security technology forward. The following four features represent the best ways to stay safe in the modern digital age.

#1: Chip Cards

In the past year, many financial institutions sent account holders new cards, even if their existing cards had an expiration date a year or two away. The big difference with these cards is that they contain an electronic chip that works as a fail-safe transaction method. Technically known as EMV (Eurocard, MasterCard, and Visa, the consortium behind the platform), these chip cards provide cutting-edge technology to secure in-person transactions. Chip cards must be in the reader during the entire transaction, and some require additional manual pin entry. This delivers added levels of security by creating unique IDs specific to the transaction. In addition to transaction fraud, this prevents in-store fraud, such as when a dishonest employee tries to swipe a card twice.

Today, chip cards have shown to be extremely effective at reducing credit card fraud. While roughly half of transactions now involve chip cards, the numbers have demonstrated a drop in fraud. For example, Visa reported a year upon year drop in fraud reports by 43% from October 2015 to October 2016. This is the largest step forward in financial transaction technology in years, and the fact that major merchants are partnering with numerous banks and credit unions shows that this will soon become the norm.

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#2: Online and Mobile Account Access

Years ago, consumers kept spending records in their checkbook, and the act of balancing a checkbook was a bit of an audit to make sure things were in order and the numbers added up. Today, with check scanning and online accounts, that type of practice is antiquated but the idea is still valid — it just has been brought into the modern digital age. Nearly every bank and credit union offers both online and mobile account access, making it one of the most simple-yet-effective ways to ensure your account activity is valid.

#3: Account Activity Notifications

In the past few years, banks and credit unions have gotten progressively more up to speed with modern digital capabilities in order to further protect their account holders’ funds. One of these features includes the advent of account activity notifications. The premise here is simple: when there’s suspicious activity on your account, you’ll get a notification. In most cases, account holders can receive these types of notifications in-app, or via text messages, phone calls or emails. This real-time notification allows you to instantly know if there’s any suspicious activity going on with your account and gives you the ability to take action by turning your card off and reporting fraud to your financial institution. Or, if the transaction is real, you can confirm it and keep going on with your business as usual.

#4: Advanced Control Settings

In addition to basic notifications, some financial institutions may offer customizable advanced features to configure the level of your account security. The result is a more secure card experience tailored to your needs and expectations. For example, CO-OP Financial Services (www.co-opfs.org), a payments and financial technology company serving credit unions, offers an app that provides extended features for monitoring and controlling purchases, including merchant type (gas, grocery, etc.), dollar amount, geography and more. Users of this app and similar technology have reported peace of mind in knowing that they can turn their card off, be notified of transactions over a certain dollar amount, or restrict usage of a card to only specific merchant types based on their preferences. Consumers should expect to see an increase of banks and credit unions offering this technology and should consider looking out for this feature when shopping for a new credit card.

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Remember to Always Be Vigilant

The above items are all ways that banks and credit unions have harnessed technology to protect the consumer. However, vigilance does start with the account holder. These tools make it easier to stay on top of things, but it’s not automatic. Here are three more things you can do to protect yourself:

●      Check your statements regularly: It’s easy to fall into the lull of checking your statement monthly when you pay your bill. However, fraud can happen at any time, so commit to sanity checking your most-used cards more frequently. Two minutes here and there can catch fraud early.
●      Change your personal info: PIN numbers and passwords are the keys to your kingdom. Change them regularly to make sure they remain inaccessible to nefarious forces.
●      Stay alert: Common sense is the way to go with cards. Be aware of your surroundings when you type in a pin, cover your hand while you enter it and inspect ATMs for card skimmers or loose hardware (evidence of tampering) before using. Most importantly, if you suspect something, report it.

Technology has evolved to provide users with better and faster means of protection. However, it only works if people make use of it. Learn what tools are at your disposal and then apply common sense to ultimately minimize your chances of fraud.

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