We think that a new tech, which compares the physical location of a cardholder’s mobile phone against the location of the ATM or point-of-sale (POS) terminal where the card is being used, will significantly reduce credit and debit card fraud. Curbing fraud via mobile devices is essential, since 27 percent of organizations reported that payment fraud incidents increased in 2012 from 2011, according to the 2013 AFP Payments Fraud and Control Survey. A whopping 61 percent of organizations experienced attempted or actual payment fraud incidents in 2012. This month, decision management software company FICO (NYSE: FICO) launched its Proximity Location Service as part of its Fraud Resolution Manager software suite. Based on proximity of a cardholder’s mobile phone, correlated with the ATM or POS, a cardholder’s account can be blocked or cleared for further activity. Obviously, this stops the fraud attempt at the source, instead of wasting months of investigation and thousands of dollars by organizations and law enforcement. “Proximity correlation is the future of fraud protection. Correlating the two locations — is your phone where your card is? — helps us validate whether otherwise unusual payments by card are more or less likely to be fraudulent,” according to FICO’s Banking Analytics Blog. Allowing the device location to be an integral part of the card payment authentication strategy puts another significant obstacle in the way of any thief, while also “markedly reducing the risk of inappropriately blocked card transactions made by a genuine customer,” FICO added in the blog post. In FICO’s pilot project in the United Kingdom, banks realized a 70 percent reduction in inappropriately blocked card transactions made by genuine customers. Several U.K. banks are now developing deployment plans for the FICO technology, developed in partnership with ValidSoft, a wholly owned subsidiary of Elephant Talk Communications Corp. (NYSE MKT: ETAK). The new correlation tool is also meant to help bank customers who travel, and have their cards declined when they are away from home. “Proximity correlation adds a powerful new tool that can help banks eliminate a great source of frustration for their customers who travel. With this service, cardholders can use their cards in other countries with significantly lower risk of being declined,” Gabriel Hopkins, senior director of product management at FICO, said in a statement from the company. We hope to see more of this type of technology utilized in the U.S. to combat card fraud at the source. Retailers and banks need every tool at their disposal to combat the millions of dollars in losses from payment fraud annually.