REVOLUT REDUCES FRAUD BY 30% WITH DISPOSABLE VIRTUAL CARDS: UK-based neobank Revolut launched disposable virtual cards in March, and has now reported that they resulted in a 30% reduction in card fraud cases. Disposable virtual cards provide users with card details that get destroyed right after making an online purchase, and new details are made seconds after the previous ones are scrapped. This way, a merchant can’t charge the customer again, as they don’t have the person’s actual card information. This can come in handy when a consumer makes an online purchase at a merchant unknown to them. The disposable virtual cards are free of charge for Revolut users.
This fraud reduction announcement comes at the right time for Revolut. Earlier in July, we reported that the neobank had discovered potential money laundering activity on its digital payments system a few months back. It informed the National Crime Agency (NCA) and the Financial Conduct Authority (FCA), suggesting that the severity of the issue was high, as conventionally companies just inform the NCA. This incident raised questions about the automated compliance checks Revolut uses to allow customers to open accounts within minutes. Reporting that it has now reduced fraud may help to improve Revolut’s public image, and increase trust from its customers, as well as regulators that are likely watching the neobank’s actions closely.
Moreover, the success of disposable virtual cards may prompt more banks to offer similar features. Ticketmaster announced a data breach earlier this year, which left the personal data of up to 5% of its customers vulnerable. With breaches like these increasingly front and center, reducing fraud is becoming a bigger challenge for banks. Neobank Monzo said that it would replace the debit cards of any of its customers who had shopped at Ticketmaster following the incident, which is probably an expensive endeavor. However, if more people opt to use disposable virtual cards, the risk of fraud would be decreased, and offering this service is likely cheaper than replacing physical debit cards after a data breach. As such, it would be wise of banks to look into offering a similar service for customers to increase their safety and limit fraud-related costs.