Banks lose more to wrongly declined cards than to fraud, exec says

Banks may be losing far more money by wrongly declining good purchases than by fraud. That is the claim from Adam Lowe, chief technology officer at CompoSecure and founder of Arculus. In an interview with PaymentsJournal, he said his company's answer is a payment card with a passkey built in, so a shopper can tap the card to prove who they are.

What a passkey is

A passkey is a digital key that proves you are you without a password. Lowe describes it as a key that signs a challenge. Unlike a password, it cannot be tricked out of you with a fake message. Many passkeys live on a phone or sync through the cloud. Lowe argues that is better than a password but still risky, and he would rather keep the key on a physical card in a pocket.

Why passwords fall short

Lowe says attacks are now fast and easy, partly because of AI. He also points to weak password resets. If a reset runs through email, a thief who breaks into the email can take over the account. Amazon has said it plans to go password-free by 2030, which Lowe calls a step in the right direction.

How the card would be used

Lowe describes two moments. First, if a shopping site sees something odd, such as a strange location, you could tap the card to log in. Second, at checkout, a bank or merchant could ask for a tap to confirm the purchase. Lowe says this proves you have the card, even when you are shopping online. It can work through 3D Secure, a common online card check, or at the bank's request.

Why banks should care

Banks usually think of this as fraud protection. Lowe says the bigger payoff may be revenue. He says that at many banks, wrongly declined purchases can cost over ten times what fraud does, and in some cases 20 times. If a purchase would be declined anyway, a quick tap could rescue the sale and the fees the bank earns on it. It could also stop a frustrated customer from moving that card to the back of their wallet.

• Fewer blocked online purchases
• Fewer passwords to remember or reset
• A tap in place of long, hard steps

What is not known yet

The figures are Lowe's own, and he sells this product. The interview does not name any banks using the card, give a launch date or say what it costs. It also does not say how many shoppers would need to be willing to tap a card online. For now, it is an idea to watch, not something to expect in your wallet soon.