Unquestionably, the biggest obstacle to the future of successful online business today is credit card fraud. According to Meridien Research, without any technological investments in fraud detection and prevention, worldwide credit card fraud will represent $15.5 billion in losses in 2005. If merchants adopt technology now to help screen credit card orders prior to processing, the widespread use of this technology is predicted to cut overall losses by two-thirds to $5.7 in 2005.
The Internet Fraud Screen (IFS) system enhanced by Visa, from Cybersource Inc. (www.cybersource.com) is intended as one of these technologies to reduce credit card fraud orders. It automatically screens online orders in real time to both minimize fraud risk and maximize automated sales conversion.
CyberSource and Visa USA (www.visa.com) are co-developing, promoting and expanding the capabilities of the CyberSource Internet Fraud Screen 5.0 enhanced by Visa. The Cybersource and Visa USA relationship is also involved in the development of a combined rules-based and neural network model using a closed-loop data modeling process based on Visa’s conclusive transaction results and CyberSource’s Internet transaction histories.
“Our partnership with Visa continues to reap rewards for online merchants, consumers and our financial institution partners as we hone our fraud screen and provide a secure environment for conducting business on the Internet. This reinforces our leadership position in providing an accurate fraud detection system for Internet-initiated transactions.” said Evan Ellis, president and COO for CyberSource.
IFS serves as an automated risk assessment service to calculate the risk associated with an online order and returns a risk score to you in a matter of seconds. You maintain full control over your risk tolerance and make the final decisions of acceptance or rejection of the order based on your risk management models.
IFS works with all worldwide major card types and uses identity validation–not card validation — to assess an order’s risk to help protect against both domestic and international fraud regardless of the payment card type used.
Unlike other fraud screening systems that rely on merchants to voluntarily provide chargeback data in order to calibrate risk scoring, IFS uses conclusive transaction results data directly from the Visa payment network to continuously refine and update scoring models. IFS uses a hybrid approach to modeling that does not rely exclusively on rules-based modeling or neural network modeling techniques. By using a hybrid of the two, IFS strives to deliver the most accurate order score possible.
IFS can assess over 100 factors and can score an order on the average of one second or less. It uses Risk Profile Codes to identify the conditions that contribute to an overall score. These codes help your customer service personnel to identify the reason(s) for a high score and proactively or reactively focus on converting the order to a sale if that action is warranted. These codes can also be used to calibrate your merchant settings to increase fraud detection. IFS scores are calculated and converted to a score ranging from 0-99. The higher the score, the higher probability of risk (e.g. an order having a score of 80 represents twice the risk as a score of 40). You can establish your own risk threshold to balance risk tolerance with sales conversion (minimizing rejection of valid orders). This risk threshold can be set uniquely for every product or order type to account for variances in risk or purchase behavior. Furthermore, you retain control over how the score is calculated by adjusting the weighting or settings associated with factors such as time of purchase, e-mail host risk, and other factors.
How IFS Works
During payment card processing, your merchant server initiates a service request (via the Internet) to Cybersource using the secure messaging protocol provided by the CyberSource Commerce Component. Aside from fraud detection, the CyberSource Commerce Component offers these transaction services:
* Global payment processing
* Tax calculation
* Gift certificate/promotional services
The transaction information supplied with each request is evaluated and compared to your predetermined risk threshold. Results are then returned to your system in real time for order disposition and processing.
The IFS Risk Profile Codes identify the conditions that contribute to an overall IFS score. Codes are associated with 16 logical categories of tests that are included in the scoring process, as well as information regarding the customer’s local time and risk associated with the customer’s e-mail host. CyberSource also provides you an IFS report that includes Risk Profile Codes, Address Verification System (AVS) codes and other relevant information to help you to calibrate your risk thresholds and score settings.
You install the CyberSource Commerce Component onto a secure NT, Solaris or UNIX server. The component is available as a ready-made plug-in or as a set of development libraries in C, Perl, or Java. All libraries and plug-ins use the open Simple Commerce Messaging Protocol (SCMP) to facilitate secure messaging between the merchant server and CyberSource.
The component provides a secure, remote messaging link between the merchant storefront and CyberSource data centers worldwide. Businesses can request services on an as-needed basis in real-time and can control all business rules and processing parameters. The component is supported on a number of commercial merchant commerce platforms and is designed for simple implementation. Some of the commerce server systems supported include:
* Blue Martini
* OrderFusion, Inc
As one more weapon in your arsenal to combat credit card fraud, the Cybersource IFS helps to relieve the burden of intense manual reviews on pending online orders and can help accelerate your meeting the mandates for fraud protection, as outlined in the Visa Cardholder Information Security Program (CISP). Visit www.visabrc.com for more information on CISP.