New risk in digital wallets as card provisioning becomes target of fraudsters

Staff Report, PNN

Security in digital payments has improved significantly over the past decade. Chip-based cards, tokenization technology, and biometric verification systems have reduced many types of financial fraud. However, as security systems evolve, fraudsters are also adapting their tactics. One of their emerging targets has become the process of adding cards to digital wallets, commonly known as “card provisioning.”

Experts say that when a customer adds a bank card to a digital wallet, a verification process is used to ensure a fast and smooth experience. Fraudsters are now targeting this step. Using stolen card information, they attempt to add cards to devices under their control, often using social engineering or phishing techniques to bypass security systems.

According to security analysts, in some cases where a cardholder is considered low risk, cards may be added to digital wallets without additional verification. Fraudsters exploit this gap to create digital tokens under legitimate user identities.

Once a stolen card is successfully added to a digital wallet, it becomes a valid token in the payment system. This makes fraudulent transactions harder to detect, and in many cases, financial institutions are forced to bear the losses.

Analysts say a major challenge in the current payment infrastructure is fragmented data. Digital wallet providers, card networks, processors, and issuing banks all operate with separate layers of information. As a result, all necessary fraud detection data is not always available in one place.

To address this issue, some technology companies have introduced new solutions that place issuing banks or fintech institutions at the center of provisioning decisions. This allows real-time analysis of device history, user behavior, and other risk-related data to approve, deny, or request additional verification.

New systems also include multi-factor authentication (2FA) and app-based identity verification for suspicious requests, reducing fraud risks while ensuring a safer experience for legitimate users.

Experts say the use of digital wallets is growing rapidly and will continue to expand in the future. Therefore, ensuring security not only at the transaction stage but also at the initial card provisioning stage is essential. They emphasize that collaboration among banks, card networks, wallet providers, and technology companies is necessary to strengthen digital payment security.

With the expansion of the digital economy, cyber fraud techniques are also evolving. Experts believe there is no alternative to strengthening technology-driven and data-based security systems to address emerging risks.