Digital Transactions Authoritative, insightful and timely information for payments professionals
By John Stewart
In the wake of the arrival of EMV chip cards and ahead of the holiday shopping rush, the Shazam debit network has launched a mobile feature that lets cardholders disable their debit cards should they be lost or stolen.
While networks like Discover Financial Services have advertised a similar feature for credit cards, the new Shazam feature, which is part of its Bolts mobile app, is the first of its kind for a debit network, a spokesman for the network tells Digital Transactions News. “You just click a button and [the card] is off,” he says. “It’s attractive for consumers and financial institutions because that’s less fraud for them.”
Since the service went live at the end of September, it has blocked some 600 Shazam cards. As the holiday-shopping season approaches, the network expects many more will be switched off as cardholders lose their cards in the shopping frenzy. “As the volume goes higher seasonally, it stands to reason there’s more potential” for lost-and-stolen fraud, says the spokesman.
The feature, whose formal name is Bolts Transaction Control, is rolling out to the network’s 1,300 member financial institutions and is one of three services available for Bolts, a mobile app Johnston, Iowa-based Shazam launched in January 2013. The other two are transaction alerts and peer-to-peer payments, a service Shazam added this summer.
So far, about half of the Shazam members have integrated Bolts and have added Transaction Control. Those banks account for some 1.3 million debit cards out of the network’s total of 4.9 million active Shazam-bugged cards. Of these, just over half a million are now active on the new service.
Transaction Control will be a popular feature, the spokesman says. “A lot of our financial institutions don’t know about it yet,” but as more become aware of it, they will adopt it, he says. “This particular enhancement is really selling itself,” he notes. “This is really convincing financial institutions to pick this up. It’s something consumers really need.” The widespread TV commercials for Discover’s similar app may also help stoke consumer demand.
Shazam’s debit cards, like those of the country’s other debit networks, are PIN-protected, so there is already a barrier to lost-and-stolen fraud. But Shazam views Transaction Control as one more layer of security, on top of PINs and EMV chips, which protect against counterfeit cards.
The Durbin Amendment requires at least one other network routing option, which in the case of Shazam issuers is Visa, and these transactions are usually signature- rather than PIN-based. But transactions routed to Visa flow back to Shazam’s switch for routing to member banks, so a cardholder using Transaction Control can disable signature-based payments, as well, the spokesman says.
The feature itself is free, though Shazam charges a $25 monthly support fee to members that adopt it. The fee is fixed regardless of how many cards the member enables, the spokesman says.
Experts agree the new feature is likely to be popular with cardholders, since debit cards tie into their checking accounts. “When it comes to debit, consumers are always much more concerned about fraud because it’s their money,” says Patricia Hewitt, vice president of consulting services at Mercator Advisory Group, a Maynard, Mass.-based firm. “There is definite interest in the market for fraud-control and transaction-control services, especially for debit.”
This is true, Hewitt adds, even though the cards come with PINs. “There is still a concern that my credentials could be compromised,” she says.” There is still the potential for fraud even with a PIN.”
And the service has one other consumer benefit: nervous parents can block teenagers when they begin overusing their cards. “If you’re a parent and your kid overspends, you can shut it off,” says the spokesman.
