June 14, 2018
Global payments provider Worldpay and French identity company IDEMIA have launched a pilot in North America that hopes to popularize the use of debit cards with dynamic CVV numbers for safer card-not-present transactions. CVV numbers, the 3- or 4-digit code physically etched on credit and debit cards that exists separately from the data on mag stripes or chips, has been used as a defense against card-not-present fraud for a long time. Theoretically, if the person making a transaction is able to enter or tell a representative the CVV number, the card is still in the hands of the legitimate cardholder. Increasingly in practice, however, the CVV numbers that only cardholders are supposed to have access to have been available to fraudsters as part of the information stolen in some data breaches.
To combat this, card manufacturers have introduced versions of their cards that have a small digital display that can change the CVV number periodically. IDEMIA, a company formed by the merger of card manufacturer Oberthur Technologies and digital identity company Safran Identity and Security, has launched versions of its MOTION CODE card in several countries internationally. The company said it has 60,000 cards in circulation that have been involved in 4 million authorized transactions with zero cases of CNP fraud. The initiative with Worldpay will be its first in North America.
Dynamic CVV technology is not new and has proven effective against fraud, but adoption has not been broad-based due to the cost of the cards. Feedback from the pilots, however, has been positive, according to Kelly Guavey, director of debit card services for Worldpay. And, while banks may not roll the debit card out to their entire cardholder base, there are certain customers for whom it makes sense.
“Financial institutions recognize that while there is a cost associated with this product, it far outweighs the costs from even one incident of fraud,” Guavey said. “Further, we expect to see different rollout strategies depending on the financial institution’s client base, offering it to their active card-not-present users or high-net-worth clients.”