How Banks prevent Online Banking Fraud
While online banking has been around for many years, virtually no cases of fraud have been reported until some years back. Since the beginning of the year 2004, reports of fraud cases nearly explode and banks are looking for ways to protect their online banking channel. Below are some of the safety measures banks deploy to combat E-Banking fraud.
One Time Passwords
To improve security, some banks use “one time passwords”, also called OTP. Upon activation of the customer’s account for online banking, the bank mails a list of OTPs to the customer. Each time the customer perform a transaction, he enters one OTP for verification. Once used, the OTP becomes invalid. If the customer runs out of OTPs, he is sent a new list.
The high-tech alternative to OTP lists are “hardware tokens”. These devices have the form factor of a key chain attachment, featuring a crypto processor and a display. A hardware token displays a new OTP every 60 seconds. Because each OTP is only valid for a limited period of time, they provide significant protection against “over the shoulder looking” and phishing schemes.