How Motion Code™ Technology Might Help Reduce CNP Fraud

New Plans to Bring Payment Security Solution to Latin America, Middle East & Africa

The rate of card-not-present fraud continues to increase with each passing year.

Effective fraud mitigation demands a high level of cooperation between merchants, card networks, issuers and payment processors. In response, solution providers are increasing their efforts to address emerging trends, constantly exploring new solutions for dynamic fraud threats.

One of the latest developments in the payments industry is a collaboration with Oberthur Technologies to deliver Motion Code™, a new solution for dynamic ecommerce protection.

Cardholders in Latin America, Africa and the Middle East may soon see Motion Code™ adding a new layer of ecommerce security to their payment cards. If the service proves successful in these regions, it may not be long before it becomes a standard technology throughout the global market.

What is Motion Code™?

On the back of most payment cards is a three-digit number referred to as a card security code (CSC). Each card brand identifies the CSC differently.

The card security code adds an extra layer of fraud protection. If the CSC isn’t provided to a participating merchant during a card-not-present transaction, the fraudster is not allowed to complete the order.

Since card security codes aren’t stored with other payment card data, they are difficult—but not impossible—for criminals to acquire. However, new technology could make CSC data even more secure.

The new Motion Code™ technology replaces these static, pre-defined CSC numbers with a digital display. The three-digit code then automatically refreshes itself every hour, generating a new CSC for each online purchase.

Motion Code™: An Answer for High-Risk Regions?

Oberthur Technologies first announced the Motion Code™ technology in late 2014. However, it wasn’t until January 2016 that the company officially announced their partnership with payments processing service provider, Prosa, with the goal of bringing the technology to Mexico.

In May, Oberthur inked another deal with UAE-based Network International, the largest payment solutions provider in the Middle Eastern and African regions to expand the program.

These two deals bring additional ecommerce fraud protections to some of the world’s top destinations for fraud. Mexico radically outpaces other major ecommerce marketplaces in terms of fraudulent chargebacks per transaction volume, including the US, EU, Russia and China. Africa is also a well-known origin point for fraud, as are parts of the Middle East.

The adoption of Motion Code™ technology in these regions, and eventually the global marketplace, may lead to a considerable reduction in localized instances of fraud.

Global Ecommerce Solutions

The LexisNexis® True Cost of Fraud study, released on May 24, 2016, shows that the real cost of fraud rose to 1.47% of total revenue for US merchants, representing an 11% increase over the previous year. According to Juniper Research, the current fraud rate will create a 150% increase in ecommerce fraud between 2015 and 2020, reaching $25.6 billion annually.

As the adjacent figures suggest, ecommerce fraud is a global problem, not just local.

With ecommerce fraud on the rise around the world, the regions typically believed to be the focal points of fraud are no longer the only places in need of extra protections.

Regions such as the United States and Europe have a defined need for greater ecommerce protections. At the same time, Motion Code™ is not the payment industry’s only attempt at incorporating a dynamic, digital security solution directly into a payment card.

Biometric companies Zwipe and SmartMetric hope to soon have fingerprint-enabled payment cards experience widespread market adoption. Using these cards, customers would authorize transactions using a fingerprint scanner built into the face of the card.

In addition to these, Visa experimented with cards created by security firm EMUE that feature built-in microprocessors. The so-called “Visa PIN Card” features a display on the card back allowing cardholders to enter their PIN number. The card would then generate a single-use password to enter into the card terminal.

Creating a New Global Standard

All things considered, Motion Code™ is a positive step for the ecommerce industry. Assuming that the technology’s implementation in Latin America, Africa and the Middle East goes smoothly, Motion Code™ is likely to eventually make its way around the world.

Obviously, ecommerce fraud is not going to be eliminated, and fraudsters will only continue to grow more resilient and more difficult to detect. Therefore, merchants need a multi-layered fraud solution.

• Secure Account Technology: makes it more difficult to steal cardholder information or commit criminal fraud
• Specialized Tools and Services: qualified and compliant service providers can help merchants optimize profitability and ensure longevity
• Industry Standardization: ensuring that counter-fraud measures are applied evenly and fairly across the ecommerce industry

The ability to generate unique, changing CSC numbers is precisely the kind of dynamic fraud-prevention technology merchants need in order to face the rising tide of fraud. However, it is only one aspect of an effective, dynamic and industry-wide answer to the ecommerce fraud challenge.