Banks could play copycat over HSBC card fraud move

A move by HSBC to combat card fraud is likely to be followed by other banks, industry watchers believe.

According to reports, HSBC is set to deploy a system that will analyse every credit card transaction on the fly. The system, supplied by SAS, will compare all transactions against a cardholder's normal usage patterns to detect and block any potentially fraudulent activity.

silicon.com Financial Services

Get the latest financial services news straight to your inbox. Sign up for the FS newsletter today!

Currently, the bank only checks about a quarter of card transactions in this way.

Legal firm Eversheds' head of financial crime Neill Blundell told silicon.com: "HSBC is very hot on preventing fraudulent transactions. Customers are losing thousands of pounds before banks' fraud teams get to know about it. Increased checks, whilst irritating for a legitimate user, are essential to bring this problem under control. Other banks will follow suit. Unless the problem is brought under control, banks will lose large sums to fraudsters. The only way to monitor this is by doing more checks as cards are being used."

Logica's director of payments Simon Bailey agreed with Blundell to a point. He told silicon.com card fraud activity is a greater risk in an economic downturn and so the case for an investment on the scale of HSBC's is stronger. However, banks will have to look at such an investment in light of the cost per card transaction.

"Big merchant acquirers will consider this route but smaller banks may not. The bigger card issuers will do more of this because the cost per transaction is low enough to build a case for the investment," he said.

A spokesman from HSBC confirmed credit card implementation was completed last year and debit card checking will come into effect this month.

SAS was not available for comment.