Using a credit or debit card for a purchase has its pros and cons. It may either help when handled properly or become a detriment if not used wisely, advised by the Payza’s CEO, Firoz Patel. Fraud related to credit and debit cards is at a very high level despite new security protections implemented by credit card companies.
While consumers are trying to keep themselves away from the current ways, the tricksters will always come up with new techniques; use of Bitcoin transactions is one of such nowadays.
How is the use of Bitcoin helping Debit & Credit card Fraud?
Bitcoin is a virtual digital currency used to conduct electronic transactions by sending Bitcoin to each other over the Bitcoin network all the time. Bitcoin is a decentralized currency controlled by no one and unless someone keeps a record of all these transactions, no-one would be able to keep a track of who had paid what.
This provides ideal opportunity to cyber crooks to take full advantage of it and use Bitcoin to aid them with their credit card fraud.
How does it work?
The analytical team of Payza demonstrates it well with the help of the example mentioned below:
Who validates that person A has sent 1 Bitcoin to person B?
Who stops person A from also sending that Bitcoin to person C?
The answer is Bitcoin miners: “a set of people who perform it all and charge a commission fee to provide services for all the completed transactions.”
As the value of Bitcoin has gone up significantly, more people have seen mining as a potential business. Not too many legitimate companies are currently trading in Bitcoin but it is definitely catching eye of many.
How is it a threat?
The companies who wish to use this payment system need to open an account using their personal details. These details can be used later fraudulently to perform malicious tasks and potential fraud. Also as this is a relatively new payment system and so not a lot of people are completely aware of it. This not only leads to consumers paying high commission fee in lieu of the service but also agreeing to avail it at a very poor exchange rate.
As per Firoz Patel, fraud is usually an outcome of ignorance and lack of knowledge leading you to share your personal details with a system which is untrusted.