Have you ever experienced the situation when you are overseas and you’re trying to buy something with your credit card, only to have the sale rejected, or worse, have your credit card blocked entirely because your bank thinks that your card is being used without your knowledge?
To be fair, banks do that as a safety measure. After all no one likes dealing with an irate customer demanding to know why their credit card which might be based in the US, is suddenly spending thousands of dollars all the way in another country halfway around the world. This is also why sometimes banks ask if you’re traveling, which countries you’re traveling to, and what are your travel dates, so that they know that your card usage in that period is more or less legitimate.
However it seems that MasterCard wants to take things to the next level and save you a phone call simply by getting customers to opt into a program in which your location and your credit card are tied together via your smartphone.
As smartphone users are probably aware, your phone has the ability to know where you are thanks to its built-in GPS. It is precisely this feature that MasterCard will use to detect if you and your credit card are in the same location to as a means of fraud prevention. Unless you’re unlucky enough to have both your phone and credit card stolen at the same time, it sounds like a pretty solid idea.
The benefit to this is no rude sales rejections, no credit cards being blocked, no expensive overseas calls to your bank explaining your situation, and also there will be no need to call your bank beforehand to inform them of your travels.
The program launched by MasterCard is currently in its pilot phase but hopefully we will see widespread adoption of this soon. In the meantime what do you guys think? Is this a good way to prevent credit card fraud?
[Image Credit - Håkan Dahlström]