SafePay Empowers Consumers to Protect Themselves against CNP Fraud
July 30, 2012
Late last week, a Toronto-based company launched an authentication technology platform it says protects cardholders and online merchants from falling victim to online fraud by notifying cardholders of pending transactions before they are processed. SafePay offers an added layer of patent-pending technology that enables users shopping at participating e-commerce merchants to respond to an immediate verification request sent to their smartphones through the SafePay app. Unlike other verification techniques that may request information on screen like user name and password, SafePay’s system is more effective because it operates independently, according to the company’s CEO, Mick Bhinder.
“Our solution is completely out of band,” Bhinder tells CardNotPresent.com. “It doesn’t appear on the screen at all. It happens on your smartphone. You download a free app. As a registered cardholder goes through the shopping card process of a registered merchant, our server identifies the cardholder and SafePay sends a real-time verification request. The cardholder sees what is about to be purchased.”
When SafePay contacts the cardholder, the phone rings with a ringtone unique to the app. In the instance that the purchase is legitimate, Bhinder says one simple click confirms the purchase and the transaction continues. Consumers who are not shopping but get the call, can abort the transaction before it occurs, know immediately their card has been compromised and can take steps to mitigate the damage. Currently, if the consumer does not respond to the notification within 60 seconds it is up to the merchant to accept or deny the transaction. But, Bhinder says the company is working on a new protocol that enables cardholders to elect to terminate all transactions to which they do not respond.
“For the first time,” Bhinder says, “we’re giving power directly to cardholders to protect their financial accounts.”
The technology, which effectively turns a card-not-present transaction into a card-present one, is equally valuable to merchants.
“The merchant now has the most accurate measure in the market,” Bhinder notes. “There’s no back-end scoring, there are no models, there are no algorithms. This is true, accurate information. How can you get more accuracy than from the cardholder? That’s a pretty powerful measure.”
SafePay is in talks with “a handful” of merchants and payment processors to implement the system. Merchants can sign up for the service for $250 per year and the app is free to consumers. Bhinder cannot yet disclose his merchant partners, but several, he says, are at the integration stage. The company hopes to get merchants on board and then market to consumers through merchant Websites.
In addition to merchants and processors, SafePay is also interested in working with banks to “close the loop” on the fraud circle. In the event of a terminated transaction, Bhinder would like partner banks automatically to contact cardholders and initiate the process of issuing a new card.