When the Internet of Things (IoT) was barely a whisper, analysts were already considering the impacts this technological breakthrough would have on our daily lives. In 2013, the Gartner Group predicted that by 2020 there would be over 26 billion connected devices. This means that IoT devices will be as ubiquitous as paying with your credit card is today. How we buy, sell, and live will undoubtedly be connected. This connectivity brings with it previously unseen security concerns. With the IoT breakthrough being a present reality, now would be a good time to strategize on your fraud protection measures.
The IoT brings with it huge potential for merchants to sell and productize in ways that 10 years ago were only the stuff of imagination. Think of the connected refrigerator:
Your customer uploads a grocery list to their connected refrigerator.
As the grocery store owner, you monitor this grocery list and the contents of the customer’s fridge.
When your in-store monitoring app discovers the customer is low on milk, a delivery is automatically sent to the customer’s home.
Your customer’s credit card is then charged for this transaction.
At first glance this couldn’t be more convenient. However, when you start thinking about security and fraud protection, questions may start to flood in. How are the refrigerator and your grocery store apps communicating? Are all the devices connected over SSL? What type of fraud protection and customer detection mechanisms are in place to ensure this is a valid credit card or even a valid grocery list?
Harnessing the Latest in Fraud Protection
Soon, the IoT will allow you to predict what your customers want and essentially deliver on the promise of immediate gratification. Monitoring wish lists, managing holiday shopping, restocking grocery and household supplies, and booking service appointments—all this will be possible with a few swipes and clicks.
As exciting as this sounds, let’s come back to the matter of fraud protection. Just as technology leaders are thinking ahead, merchants must do the same with fraud protection solutions.
Your fraud protection solutions must feature the latest in a detection and prevention solution:
- Geolocation: Verify the location of the customer with the actual location of the active card.
Biometric analysis: Compare the customer’s fingerprint with that of the cardholder.
Address verification service: The issuer compares the addresses provided during the transaction.
CVV: Additional credit card security code required during the final payment authorization.
IP intelligence: Deep analysis of the IP address used for the transaction to monitor possible risks associated with this location.
Device intelligence: Deep packet inspection and proxy piercing capabilities to expose specific identifying details of the connected device submitting the transaction.
3 domain secure: A cardholder authentication protocol for e-commerce transactions and CNP purchases.
Merchant co-op: New orders are compared against millions of orders taken by other merchants contributing in-network and scrubbed for fraud risk.
SSL: Secure encrypted communication protocols between devices and payment solutions.
Just as mobile and e-commerce channels have brought on demands to change the way you need to protect your business from new fraud risks, the same holds true for the IoT. The pace at which the IoT will impact your business practices is still largely unknown, but the reality is that your customers want the ease-of-use that comes with connectivity. The present challenge is to clearly define how your business can be protected from the inherent security flaws and risks that come with this new level of connectivity.
Be Ready for the IoT
Major credit card companies, including Visa and MasterCard, are already thinking ahead and preparing for this expanded landscape of buying and selling. As a merchant, new requirements are sure to roll out to you to keep pace with what the credit card companies are planning to do.
For any questions you have about IoT fraud prevention solutions, the Verifi team is here to provide answers and guidance—from Visa Ready, mobile wallets, digital fingerprinting, MasterCard’s Commerce for Every Device program, to multi-layered fraud protection and more. Verifi is your trusted partner in cutting edge fraud prevention and protection, providing managed solutions that will grow with you as you move deeper into IoT commerce. 2020 isn’t that far away: now is the time to plan and prepare your fraud prevention strategy for IoT. Call us today to talk about your security and protection options.
Article originally published verifi.com