Belgian debit card users blocked from making non-EU transactions

According to weekend news reports, the limitations, which started today, are the direct result of the high levels of fraud relating to transactions made outside of the European Union.

Vincent van Quickenborne, the Belgian Minister of Finance, is quoted as saying the lockdown is not fixed, and that Maestro cardholders wishing to make transactions outside of Europe can request that their bank lift the block.

A report on the HIN newswire says that the automatic block on non-EU transactions has been made owing to the problem of magnetic stripe skimming and that the banks are looking to restrict usage to the EU territories, where Maestro transactions are secured using the card's smart chip system.

HIN says that some 22 banks are affected by the Maestro card lockdown, although cards issued by Citibank and Deutsche Bank are not affected by the issue.

Other newswires report that the problem of card slimming has increased by more than 750% in the last three years.

Commenting on the lockdown, which is unprecedented in debit card circles, Bennie Peleman, vice president of ValidSoft, the anti-fraud specialist, said that Belgian banks are clearly very worried about the rapid rise in card fraud.

"Fraud creates major headaches for banks; they generally have to foot the bill for fraud and call centres are overwhelmed with 'false positives' from customers who have had cards blocked when they are on holiday or travelling for business", he said.

But, says Peleman, payments companies and card issuing banks now have sophisticated new technology to fight back.

ValidSoft, he explained, are actively targeting the Belgian market with the firms' VALid-POS card fraud prevention system.

"Card fraud has become a global concern recognised by leading banks world-wide. The measures taken in Belgium, although perhaps drastic, are understandable and definitely reflect a primary objective in protecting their customers' interest", he said.

"It is our strategic objective to contribute in restoring the confidence in both card present and card not present transactions into the financial services markets world-wide", he added.

The problem facing the Belgian banks, he went on to say, is that comparing the current transaction to traditional spending patterns is fundamentally inaccurate.

Perhaps worse, he says, banks cannot typically carry out this check fast enough, so driven by the need to prevent fraud, they actually end up declining the transaction, or in the case of the Belgian market completely disallowing the transaction.

Denying a legitimate transaction, says Peleman, is called a false positive and 90% of the transactions flagged as suspicious are actually legitimate.

Trying to contact card owners to eliminate these so-called 'false positives' is a huge expense and headache for banks. Banks often cut off credit cards because transactions look suspicious, only to be left with irate customers.

"The problem for the Belgian banks is the negative consumer impact, potential customer churn and revenue loss through disallowing millions of international transactions that generate lucrative interchange fees for the banks", he said.

 

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