Financial institutions are improving their verification measures to avoid fraud through Apple Pay, as recent reports highlighted possible fraud through the new contactless payment system. The fraud didn’t arise due to issues with Apple Pay, but instead was the result of bad security on the side of banks.
Criminals had reportedly attached cards to Apple Pay with very little information, and then used the system to make purchases. Banks are responding by asking more questions and adding other forms of verification that people must go through in order to attach a card to Apple Pay.
Banks may now ask about recent purchases, require calls to customer service, or ask for details that only the real owner of a card would now. This does not deal with criminals who have already successfully attached someone else’s card to Apple Pay, but the new verification measures should prevent others from stealing and using cards.
One of the more common steps taken by financial institutions is to put in place a “yellow path” activation system. When that system is used, one-time codes are sent via email or text to a legitimate card owner’s phone or email address. This prevents fraud in the same way as other two-step authentication systems.
Via [Apple Insider]