According to Aite Group, payment card fraud costs the U.S. card payments industry $8.6 billion a year. As credit and debit card transactions continue to rise, so do instances of consumer payment fraud. A combination of sophisticated scam artists, insider fraud and inadequate testing processes creates vulnerabilities for the payment card industry and consumers.
Processors and retailers risk losing revenue and a significant portion of their customer base as a result of data breaches.
While major data breaches have cast card processors in a negative light, Visa and MasterCard have taken steps to address payment card fraud, generating breach warnings against the use of production data to run system tests and initiating payment card industry standards.
However, industry alerts and payment card industry compliance audits alone do not provide sufficient protection.
Payment processors that successfully mitigate fraud and alleviate the risks associated with data breaches improve their chances of remaining viable in the long term.
Fraud prevention requires advanced technology to manage large volumes of transactions while closely guarding consumer information. Outdated or manual testing processes may risk capturing complete consumer card information, allowing expiration dates and other sensitive data to be represented on reports or test systems.
In some cases, corruption in programming and data output may expose sensitive information that opens up risk as well. Consumers have control over the physical location of their credit cards, but are helpless if a testing program fails to truncate the card numbers properly.
With the emergence of technological alternatives, processors are turning to automated systems, which eliminate the need to employ actual credit card data and enhance operational efficiencies. Automated testing platforms give processors the ability to reduce payment card fraud by offering end-to-end testing and adapting to the industry's ever-changing regulations.
Through automated testing technology, processors gain access to in-house testing systems 24 hours a day, seven days a week to perform a variety of test functions at their convenience.
Unlike shared, common resources, which require processors to wait to execute tests and often generate errors, private testing environments allow for quick, secure and predictable results.
The sheer volume of transactions and the increasing amount of necessary tests require methods that ensure accuracy, and more important, protect everyday consumers.
Adopting modern testing methodology will prove a worthy investment, one that will enable payments processors to avoid the negative press, lawsuits and exorbitant fines that can result from a data breach.
Processors are gaining control of their practices by employing technology that mitigates fraud and improves speed to market. Automated testing enables processors to offer greater security to their merchants.
And merchants, in turn can protect their most valuable asset: their customer base.
Carl Kubitz is the president and chief executive officer of Lexcel Solutions, a provider of business virtualization and testing software and services for the payment technology industry.