How do you solve a R1-billion a year credit card fraud problem?
That R1bn – which is 77% of the overall R1.2bn card fraud recorded in 2021 – comes from online transactions, where some websites don’t require a second authorisation. These match global statistics for card fraud.
If you’re Bank Zero, you build your own banking system from scratch and patent a system that prevents credit cards from being used without authorisation. It may not have solved the problem for the whole banking industry, but it has for itself.
Since it launched 15 months ago, Bank Zero has had zero card fraud, its chairman Michael Jordaan tells Stuff.
“While all the global banks have come to accept a certain percentage of transactions as fraudulent, this plucky SA startup has innovated the fraud risk away,” says the former CEO of FNB who started its innovative digital banking with the country’s first smartphone banking app.
“We’re very proud that an African startup has cracked this huge global problem,” adds Jordaan, who resigned from FNB in 2013. He has also started uncapped wireless provider Rain and become a prolific investor in tech startups.
Since it launched in August 2021, the neobank’s customers are alerted when an attempt is made, but unless they authorise the transaction, money will not be transferred.
CEO Yatin Narsai says “Bank Zero has implemented a special security system which ALWAYS requires your authorisation for every single online card transaction, whether the website is secure or unsecure”.
The system will also pick up “regular card transactions resembling modern-day card debit orders” and stop them too.
Meanwhile, “If you’re over 25,” says Jordaan, “and you haven’t yet experienced someone fraudulently taking money from your bank account, then you’re in the minority. We are excited to see how safe our innovations are keeping our Bank Zero customers.”
There are endless stories of card details being stolen online, or cards being skimmed, he adds. “Test it next time when you are with friends, ask who has had any of these experiences. You will be astounded.”
What to know more?
Listen to my podcast interview with Michael Jordaan when Bank Zero launched about how deep insight into the plumbing of banking and no legacy business model enabled the challenger bank to offer zero fees and other canny innovations.