Fraud comes to Apple pay

It didn’t take long for fraud to find its way to Apple Pay.

Some banks are seeing a growing incidence of fraud on Apple’s mobile-payment service as criminals exploit vulnerabilities in the verification process of adding a credit card, according to people familiar with the matter.

Banks are tightening the verification process in an attempt to curb the fraud, these people said, declining to be identified citing a confidentiality agreement with AppleAAPL, -0.21%  .

The fraud issue was brought to light by Cherian Abraham, a payment expert who works with banks and retailers on mobile-payment strategies, in a blog post in late February. He said fraud “is growing like a weed, and the bank is unable to tell friend from foe.”

Abraham said it’s not “an anomaly” to see fraud accounting for about 6% of Apple Pay transactions, compared to about 0.1% of transactions using a plastic card to swipe. 

He noted that fraud rates vary by issuing bank.

An Apple spokeswoman declined to comment on the fraud rates, but said Apple Pay is “designed to be extremely secure and protect a user’s personal information.” She added that “banks are always reviewing and improving their approval process, which varies by bank.”

Credit to DAISUKEWAKABAYASHI & ROBINSIDEL. Source: marketwatch

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