Banks have observed a growing fraud occurrence in Apple’s mobile-payment system as criminals continue to exploit the verification process credit card additions, some tech observers say.
Banks have tightened the process of verification to fight off the fraud.
The fraud issue was brought up by Cherian Abraham, a payment systems expert who collaborates with retailers and financial institutions on mobile payment solutions.
Abraham indicated that it’s never an anomaly to observe fraud making up about 6% of Apple Pay transactions, compared to the 0.1% payment transactions via a plastic card swipe. He also said the rate of frauds vary from one issuing bank to another.
Apple Pay utilizes a secure element in its latest iPhone models to store encrypted payment information separately from the rest of the mobile device. A fingerprint reader ensures the owner of the phone has made the purchase and issues a one-time code entry so merchants won’t see credit card details from the buyer.
Creating a card provisioning process is time consuming and may turn away potential Apple Pay consumers.