Pulse Shows Pros of Appliance Computing to Fight Fraud

Card transaction handler Pulse is investing in HP's appliance computing technology in an effort to make the battle against bank card fraud less expensive and more consumer-friendly. The company also saved considerably cost by moving away from Oracle, according to columnist Rob Enderle.

By Rob Enderle
Fri, July 20, 2012

CIO — One of my areas of coverage is security, and one of the specific areas I follow is bank card fraud, largely because it happened to me once. A few years back, my wife and I apparently bought an SUV without knowing it. Fortunately, our case involved a credit card and, thanks to Citibank, the remedy was pretty painless. Had it happened with our ATM card, though, things could have been expensive and painful; ATM cards don't have the same protections as credit cards.

That's why, when I found out about the HP/ReD solution for Pulse, which is one of the largest card transaction handlers, I got interested. Using ReD and HP technology, Pulse implements real-time fraud protection.

Prior to this, folks could only approach near-real-time, which means the bank finds out the transaction is fraudulent at about the time the criminals drive away in the car you bought them. While this may prevent them from buying a nice sports car to go along with the SUV, you are still out that first purchase.

Real-time means the criminals don't screw you over at all. To make that happen, the solution didn't just need to be fast, it needed to be cheap. That's the appliance computing part of this story.

For Banks, Fighting Card Fraud Not Worth the Cost

Until recently, most banks accepted credit and ATM card fraud as a cost of doing business, largely because the cost of prevention appeared to them to exceed the benefit. Realize that much of the cost for fraud, particularly in the case of ATM fraud, is born by the customer. In a case of broad fraud, it can cost up to 9 months of near full-time work and around $250,000 to fix you identity and credit scores—and you may never again get the high rating you once had.

Commentary: ATM Fraud Refunds May Not Come Quickly—If At All

For a solution to work, then, it has to be very inexpensive. Since banks don't want false positives—after all, they make money on the transaction and don't want you using another card—they won't accept a system that so aggressively blocks transactions that legitimate ones are accidently blocked as well.

Pulse picked the ReD platform because it came closest to meeting its fraud prevention needs. However, to meet both speed and cost requirements, it needed to reside on a far simpler baseline of technology.

HP's Appliance Allowed for Growth Where Oracle's Didn't

Pulse was running its initial near-real-time system on IBM servers, EMC storage and Cisco networking, all against an Oracle database. This was working, but the overhead of keeping this high number of vendors talking to and working with each other became a problem. Several of these vendors compete, after all and the software cost (more on this in a moment), the inability to grow quickly and the maintenance complexity made the result too slow and far too expensive.

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