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Online fraud prevention in Republicofkorea

Ecommerce fraud and online fraud prevention in Republicofkorea

Read below about payment fraud, online fraud And fraud prevention in Republicofkorea
A leading card market, South Korea is taking steps to increase payment security while ensuring that restrictions do not stifle ecommerce growth.

Payment Fraud Profile
Fraud prevention initiatives have received new impetus in South Korea following the theft of card data reported in December 2013. Estimates suggest that as many as 20 million people (40% of the population) were affected, although the extent of actual financial loss is uncertain and it would appear that passwords and CVV codes were not among the data stolen. The Financial Supervisory Service (FSS) announced new restrictions on the storage of card information following the incident and consumer trust in card-based transactions was shaken – significant in a country that is home to ‘the world’s most prolific card users’ (The Economist, November 2013).

To speed up the introduction of chip and PIN technology and replace magnetic stripe readers, in April 2014, the FSS announced that card companies will pay for EMV terminals in 650.000 small stores, enabling access to such terminals by 2015. Large stores are expected to use these chip readers by Q4 2014. The financial authorities have also recently asked card companies to provide text confirmation of transactions above a certain amount free of charge, where previously a fee was charged.

Ecommerce and Mobile Commerce Fraud Prevention

Reports indicate that South Korea has recently updated its approach to online fraud prevention, which, it was felt, was holding back ecommerce growth. Under the ‘old’ rules, a first time shopper buying goods or services online from a Korean website had to install ActiveX controls and receive an online authentication certificate. The country is now looking for a new balance between security and convenience and sophisticated online fraud prevention measures can play a crucial role in safely enabling ecommerce transactions. These measures will include cardholder authentication - all Visa members in South Korea must participate in Verified by Visa – but this needs to be combined with other fraud screening and prevention tools to ensure that genuine business is not declined.

With 45 million mobile subscribers, South Korea offers good potential for mobile commerce. South Koreans are increasingly using their mobile phones to access the internet and shop online and over 21 million of them were reportedly using shopping applications in January 2014. The mobile channel presents very specific fraud prevention challenges and requires specially tailored fraud rules to ensure that merchants see the full benefit of mobile commerce growth.