U.S. Bank is using mobile geolocation to address a commonly experienced inefficiency with the advent of online fraud protection: banks blocking non-fraudulent transactions due to assumptions about normal buying patterns.

It is doing this by launching a new opt-in technology on some of its mobile applications in conjunction with the Visa-developed geolocation service. The app enables the location of a card transaction to be matched with the location of the user’s phone using GPS, and by reconciling the location of both transaction and mobile device, will sanction transactions, minimize consumer disruptions and further reduce the risk of fraud.

“Geolocation works by matching the location of the phone and the card being used,” said Clifford Cook, senior vice president of product and marketing for retail payment solutions at U.S. Bank.

“If one or the other is stolen and reported by the consumer, it will cause the geolocation services to trigger that there is a mismatch in the data and an authorization decision will be made appropriately. In addition, customers enrolled in geolocation services can still opt into other services such as real time alerts and mobile banking to check the status of their card and transactions.”

Location-based security
Customers with the U.S. Bank FlexPerks service can opt-in to the geolocation feature through the FlexPerks mobile app, and cardholders who participate in one of U.S. Bank’s co-brand programs can opt-in through their corresponding card’s app.

The service, which will initially be available to U.S. Bank’s co-brand and financial institution partners, attempts to mediate two equally important, yet frequently at-odds, priorities for the bank— fraud protection and customer convenience.

With much of online fraud protection being speculative, based on a picture of trends in spending behavior sourced from data, it seems that consumers are currently living in a transitional period, when fraud protection is an essential technology in the workings of a financial institution, but still relatively underdeveloped.

Fraud alerts can be triggered by activities as innocuous as vacations or higher-than-typical spending. The ensuing reactivation process typically causes much distress to the consumer, generally requiring multiple levels of identity authentication under the aegis of a customer service agent.

Using location is a novel way to combat the intrusion of falsely triggered fraud alerts by squaring an integral aspect of many card transactions with an alternative response to the immediate card shutdown that many consumers would prefer to see as a last line of defense.

Mobile finance
The mobile platform, which was briefly seen as a precarious space for financial institutions to expand their reach, is quickly becoming one of the most important resources banks are facilitating for both security and convenience thanks to advancements in mobile technology such as the one U.S. Bank is undertaking.

The partnership with Visa is actually a continuation of a longer excursion into geolocation-based mobile technology for U.S. Bank. Last year, it piloted the Your Community app, developed in conjunction with BlueSoho, which used geolocation to bring community members relevant information and resources, such as local events, promotions, noteworthy news and financial education advice (see story).

And a recent report named mobile as the most heavily used banking channel, with the average user accessing mobile banking 8.4 times within a 30-day period (see story).

“Geolocation helps us validate that the card and the phone are in the same location raising our confidence that the cardmember is shopping,” Mr. Cook said.

“This helps us authorize more transactions and helps protect customers’ security, so it’s a win-win for everyone.”