Though e-commerce remains a frightening endeavor for those hesitant to give credit card numbers over the Internet, such transactions are likely just as frightening for online merchants who have to hope that the sales aren't made using stolen or fraudulent credit card numbers. On Monday, Visa USA Inc. and CyberSource Corp. took a step aimed at helping merchants ensure that they aren't the victims of fraud by introducing CyberSource Advanced Fraud Screen Enhanced by Visa.
CyberSource Advanced Fraud Screen is a system combining fraud trends and individual card-usage statistics to provide e-tailers with fraud risk assessments for each pending transaction, said Jeff King, director of risk product management at CyberSource. This information will enable merchants to identify transactions that are most likely to be fraudulent and to stop them, King said.
When an online customer clicks the "buy" button, transaction information provided by the buyer, including shipping, billing and e-mail addresses, as well as the phone number and other data, is sent to CyberSource, King said. CyberSource runs that information, along with the IP (Internet Protocol) address, location of the Internet connection being used and 150 other data points through the Advanced Fraud Screen system, he said.
Those checks include a real-time call to Visa to determine if there is any risky or unusual behavior associated with the credit card number being used, King said. The call to Visa's computers allowsthe CyberSource system to view up-to-the-minute data on the card in question to cut down on false positives, he added. The merchant is then given a risk score of 0-99 and is able to accept or deny the transaction as they see fit, he said.
A system like CyberSource Advanced Fraud Screen is needed because "the Internet has enabled a new type of bad guy," King said. Online credit card fraud is now more sophisticated and high-tech than offline credit card fraud or even online fraud from a few years ago, he said.
The desire for security and fraud prevention in this new environment might lead merchants to tighter policies, but those could lead to more transaction denials, he said. As such, e-tailers must find a way to balance accepting as many orders as possible with protecting themselves against fraud, King said. CyberSource and Visa's new offering is one way to do that, he added.
"It really does enable e-commerce and consumer confidence," he said.
The system will be available in January, King said, citing the demands of the holiday buying season as the reason the system isn't available now.
When the Advanced Fraud Screen is available, companies will need to sign up with CyberSource, download an application and pay the associated fees, he said. Multiple clients written in Java or Perl will be available, as are kits and plug-ins for major e-commerce, ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) applications, he said. A one time setup fee of US$5,000 will be required. There will be either a fee of $0.18 per transaction (the price goes down based on volume) or an annual subscription which costs, at most, $10,000, he said.
Also available is a three- to five-day "Jumpstart" consultation that helps companies implement the Fraud Screen system and create policies for how to use the risk assessment scores in their sales systems, King said.