The once-booming market for reloadable prepaid cards has seen a slowdown in new-account growth in recent years amid heavier competition and consolidation, causing longtime providers to look for ways to stand out in a crowded field.

NetSpend broke out of the pack several years ago when it pioneered cash-back rewards for prepaid card purchases, and most rivals including American Express’ Serve, Green Dot and RushCard eventually followed.

Now InComm, another prepaid card stalwart, is looking to differentiate its products by enabling consumers to take an active part in preventing online fraud, an area where fraud levels are rising fast. Fraud in card-not-present channels, including purchases made online and over the phone, is a source of concern to consumers and is poised to hit $7.5 billion by 2020, according to a recent study by Aite Group.

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Atlanta-based InComm will pilot Tender Armor’s CVV+ fraud prevention solution, introduced late last year, as a service included with its reloadable prepaid debit cards, InComm announced Nov. 15.

Participating cardholders will each receive a new three-digit security code daily to use in place of the static CVV code printed on network-branded payment cards that’s required for most card-not-present transactions. Cardholders may opt to receive their code, which is sent anew daily, via text, email or by visiting a bank's website (a mobile app to fetch the code is in development).

InComm is the first major financial services provider to try out Tender Armor’s approach that gives card issuers a way to directly deliver real-time, dual-factor authentication to customers. Some recent surveys suggest consumers—who are increasingly aware of and concerned about fraud—are willing to take part in helping to block fraud, but there’s little evidence so far that they will do so.

While card network policies generally absolve consumers of liability for card fraud, when fraud occurs consumers’ accounts typically are frozen, and for those who rely solely on their prepaid card and live paycheck to paycheck, the inconvenience can be costly, said Madeline Aufseeser, Tender Armor’s co-founder and CEO.

“Not only are these cardholders concerned about how to react to a fraudulent event, but they’re actually afraid to shop online,” Aufseeser said.

InComm hopes extending the fraud-prevention service to cardholders could increase consumer convenience for prepaid cards and differentiate its product in the market, said Scott Meyerhoff, InComm’s chief operating officer, in the release.

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