Ahead of Money20/20 Europe in Amsterdam, Finextra caught up with Amanda Gourbault, chief revenue officer, CompoSecure, to discuss the future of cards and how they can be used 'beyond just payments,' for example, to enable digital security amid continued
credit card fraud and account takeover (ATO) fraud.
Cards being used 'beyond' payments
As Gourbault surmised, card payments are increasing in popularity and “we’re witnessing how more and more people around the world, in developed regions like Europe (even in traditionally cash-based economies like Germany), as well as developing regions like
South America use cards to pay to a greater extent, moving away from the traditional habit of paying with cash." And zooming in on metal cards, Gourbault mentioned that CompoSecure’s customers (i.e. metal card issuers) are seeing greater levels of acquisition,
activation and higher levels of spend with the metal payment card, simply because they are giving their customers (i.e. the cardholders) a better experience.
We're also observing a rise in the use of cards for purposes beyond in-store payments. "One example is the growing adoption of everyday payment cards for public transport in many cities. This eliminates the need to purchase paper tickets or load funds onto
specific public transport cards, streamlining the experience for commuters and visitors alike." But the card can also be leveraged for other exciting use cases, creating peace of mind in our increasingly digital everyday life.
Double challenges: fraud and false declines
As we live ever larger parts of our lives in digital spaces, we become increasingly exposed to fraud. Global card fraud losses are projected to reach $397.4 billion over the next decade. To counteract these rising fraudulent activities, banks are intensifying
their anti-fraud measures, but in conversation with Gourbault, she revealed that "95% of the time a transaction is declined, there is no reason for it. I’m going online, I want to buy something, I know I’ve got the funds to buy it, but the transaction is declined,
and then I’m frustrated. And what happens? I put that card to the back of my wallet and I get another one out."
Gourbault advised on how the payment card could be used to address both fraud and false declines. "Imagine a scenario: I’m in Dubai. I get out my card and the bank thinks ‘what is she doing in Dubai? That’s a risky transaction, I’m going to block it." She
goes on to explain how the cardholder could digitally sign the transaction by simply tapping their everyday credit or debit card to the ubiquitous smartphone, which could prevent the transaction from being falsely blocked. "The digital signature signs the
transaction and it can go through. My bank is happy because I signed that transaction, they know it’s me. I’m happy because I have been able to make that purchase and that’s my moment of truth, the bank was there for me, that’s the card that I’m going to use,
that issuer has my loyalty and they have my spend."
Passwords are inherently vulnerable
Another form of fraud, ATO fraud, where a fraudster gains unauthorised access to a victim's bank account to steal funds, is increasing.
Mastercard found that ATO fraud rose by 131% in the second half of 2022 compared to the first half of 2021. Providing another example, Gourbault mentioned that in India, 55% of all fraud stems from ATO fraud. "In 2025, ATO fraud is going to cost the global
economy $17 billion. 80% of this comes from compromised passwords. Passwords and OTPs are vulnerable. They are vulnerable to phishing, to smishing, to social engineering, to AI. However, these are just the stats. Let’s look at this from the human perspective.
Imagine you’re trying to log in to your account, and you’re blocked because the hackers got there first. Or you go into your account and find that your life savings have been drained from your account. But what if you could go passwordless? What if you could
simply tap your credit or debit card to your phone to prove you are who you say you are? And not just when you log in – when you perform any sensitive transaction, when you change your phone number, when you authenticate to a call center or when you change
your address."
The importance of digital asset custody
Continuing the discussion, Gourbault said: “Recent events have highlighted the importance of individuals having custody of their own digital assets, whether it be cryptocurrency, NFTs, or other blockchain-stored assets. Consider the crypto exchanges that
have failed in recent years, causing many people to lose their life’s savings. When a major cryptocurrency exchange collapsed, it took billions in customer assets with it. Since the exchange held the keys, assets that people believed they owned disappeared
when it failed. With digital assets, owning your keys is crucial. Just as you own the physical keys to your car and house, you need to own the keys to your digital life, which is known as self-custody. For this you need a cold-storage wallet—an offline device
that stores your private keys. This device could be an elegant metal card that generates and stores the keys and signs transactions, combining the simplicity of an online hot wallet with the security of a cold wallet.”
A card can do so much more
Gourbault closed our interview by stating: “We are convinced that a card can do so much more than just make a payment and that’s why we have developed Arculus Authenticate and Arculus Cold Storage. Our vision is to make your payment card the (hardware) key
to your digital life, bringing security and peace of mind, preventing card fraud, false declines, and account takeover fraud, and enabling people to have custody of their own digital assets. One tap, total security”.