Payment System Adds Fraud Protection for Visa

Welcome Guest. | Log In| Register | Membership Benefits

July 13, 2000 (11:58 AM EDT)

Payment System Adds Fraud Protection for Visa

By Christopher T. Heun,

A new payment system for online transactions announced Wednesday by Visa and Trintech Group is expected to lower the cost of online transactions for merchants that accept Visa and will provide the credit-card company with a greater level of fraud protection.

"It's a big win for some of these dot-com companies, where a few margin points means the difference between profitability and oblivion," said Chris Christiansen, an International Data Corp. analyst.

Trintech (stock: TTPA) launched PayWare mAccess, a secure payment system designed for mobile devices that requires consumers to use a PIN code to verify making a purchase. Its partnership with Visa will mean merchants will have a higher level of authentication for purchases made over the phone or online, which have a higher fraud rate than transactions conducted when a card is presented to a merchant and a customer's signature can be verified.

The new system can also be applied to wireless transactions, which Christiansen said, is "not critically important today but will be critically important in the next year or two."

Christiansen said the new system will help merchants lower their "repudiation rate" and will have the greatest effect on disputed sales of software and music. These are products that customers can "take ... out, play with it, copy it, and then return it on the basis that the item was not what they ordered."

Less than 10 cents of every $100 spent using a Visa debit or credit product is lost due to fraud, according to a company spokeswoman. Visa doesn't compile separate fraud rates for Internet transactions.