Visa to Use Your Phone’s Location to Prevent Credit Card Fraud

The credit card company is going to start checking whether your phone is in the same place where your card is being used — in Europe, at least.

VISA credit cards

Sure, you like all the great benefits of having your phone know where you are. Looking up directions or local weather information becomes that much faster. But outside companies and agencies are equally delighted to have access to your location information–and not just to send you coupons. Increasingly, they’re going to be using that information for purposes that have nothing to do with your convenience and fancy.


Some of those purposes you’ll like. Others you might not be so keen about. One you’ll probably be okay with was just announced by Visa Europe. The credit card company is going to start using information about the location of customers’ mobile phones to prevent credit card fraud.

Visa Europe has partnered with a company called ValidSoft that can establish whether your mobile phone is in the same place as the merchant or ATM where your card is being used. The assumption is that if the two devices are in close proximity, it’s probably you using the card, even if you’re far afield from your usual stomping grounds. If the two devices are not in the same place, the system may send up an alert.

Proximity information will only be one of a number of variables the system will use to assess the likelihood of fraud during any particular transaction. The companies say the system will both reduce card misuse and cut down on the number of “false positives.” That, they say, will create a better experience for users when a particular purchase deviates from their expected patterns–no more annoying calls or locking your card up when you’re simply on vacation–and it will cut down on case-management processing costs for card issuers.

Earlier this year, Gartner issued a report predicting that by 2015, at least 15% of payment card transactions will be validated using mobile location information. “Visa Europe’s move is the start of this trend,” author Avivah Litan wrote on the Gartner blog. “These services have great value when it comes to protecting payment accounts and preventing fraud,” she wrote. “Many more banks and card companies will adopt them once they see the value.”


About the author

E.B. Boyd (@ebboyd) has holed up in conference rooms with pioneers in Silicon Valley and hunkered down in bunkers with soldiers in Afghanistan.