Evan Schuman's StorefrontBacktalk

The search for the perfect payment-card authentication scheme goes on. Last month, Visa Europe cut a deal with an Irish security vendor called ValidSoft to verify the identity of cardholders by matching up a card user’s location with the location of his/her mobile phone.

ValidSoft gets the phone’s locale directly from the mobile carrier; if the phone is in England and someone tries to use the payment card at a German retailer, that will set off a fraud alert almost instantly.

Gartner Analyst Avivah Litan thinks that within five years, at least 15 percent of all payment-card transactions will be validated using mobile location. “After all, our mobile phone is practically tied to our umbilical cord—we rarely leave home without it. Visa knows it, and so do the rest of us. Why shouldn’t it serve as a useful tool for preventing fraud against us?” she wrote in her Gartner blog.

That’s all true—as long as everyone keeps in mind that using a mobile phone to confirm cardholder location still isn’t the panacea that every retailer would love to have.

Let’s leave aside the simplest, most obvious problems with tying a phone’s location to a card’s use. Yes, some people have multiple phones. Some people use different phones in different countries (admittedly, that’s a more common problem in Europe than in the U.S.). Some people loan out their phones and still need to use their payment cards.

Short of building the card into a smartphone’s digital wallet using NFC—a perfectly reasonable idea that mobile carriers, card companies and retailers have been fighting over for years—there’s no guarantee that a customer’s card and phone will always be in the same place.

But that’s not the big problem; it’s just an inconvenience. Most people only carry one mobile phone, and they’ll learn soon enough if there’s a problem using a payment card without that phone in hand.

The real challenge is that as soon as mobile location becomes the new standard for payment-card security, thieves will immediately begin probing for a new soft spot.

One possibility: Thieves could break into the systems of the vendor providing the mobile-location service (such as ValidSoft) and create a fake location for the mobile phone associated with a particular payment card. That’s not impossible—some thieves have demonstrated they can drill deep into what should be hardened systems.