Tuesday, March 24, 2015

Pointing Fingers in Apple Pay Fraud


When Apple was planning its Apple Pay electronic payment system last summer for its iPhones, the nation's banks raced to be included among the first credit card issuers associated with the new technology.

Apple's news release announcing Apple Pay had gushing quotes from Jamie Dimon of JPMorgan Chase, Brian Moynihan of Bank of America and Kenneth Chenault of American Express, along with a list of other companies as launch partners, including Wells Fargo, Citigroup and Capital One.
When Apple was planning its Apple Pay electronic payment system last summer

Marianne Lake, JPMorgan's chief financial officer, said at the time of the introduction of Apple Pay, "It's the future, so it's great."

Six months later, some of the nation's banks are privately complaining that Apple Pay may not be so great after all.

But the banks may largely have themselves to blame.

Ursula Anderman teaches New York pedestrians how to use Apple Pay, as part of a Visa/Chase promotion, on October 20, 2014 in New York.
A raft of headlines over the last week about unusually high fraud rates from thieves using stolen credit numbers on Apple Pay has exposed what many of the banks privately acknowledge they have been trying to fix for months.

An industry consultant, Cherian Abraham, put the fraud rate at 6 percent, compared with a traditional credit card fraud rate that is relatively minuscule, 10 cents for every $100 spent. Mr. Abraham wrote in a blog post, one of the first to spotlight the issue, that the Apple Pay fraud "is growing like a weed, and the bank is unable to tell friend from foe. No one is bold enough to call the emperor naked."