The Green Sheet Online Edition

Merchants respond to card not present fraud

A poll of 379 online and offline merchants about their current anti-fraud efforts revealed most merchants are not only aware of fraud, but a majority are already addressing fraud through verification technologies. The survey was conducted jointly by SignatureLink Inc. and CardNotPresent.com in August and September 2012.

"We applaud the many merchants using active authentication techniques, but the user experience could be improved among legitimate customers by deploying risk-based passive authentication to invoke active authentication," stated SignatureLink Chief Executive Officer Greg Wooten.

First-generation Internet Protocol address prescreening filters can easily be bypassed and manipulated by fraudsters; second-generation geolocation solutions provide the greatest security, he added.

Key fraud survey findings include:

• 66 percent of merchants report friendly fraud levels between 0 and 5 percent

• 65 percent currently deploy customer authorization/validation systems

• 52 percent perform pre-fraud screening before payment gateway authorization

• 10 percent collect buyer voice/signature consent to terms and conditions

According to the study's authors, only 10 percent of respondents reported that they collect voice or signature consent to company terms and conditions (T&C) and refund policies, and the other 90 percent run the risk of exposure to "cybershopping," defined in this study as an incident in which a customer makes a purchase, receives the merchandise and then disputes the transaction with the credit card company, thus triggering a chargeback.

Unfortunately, an online link or pop-up to a merchant's T&C may not be enough to remedy the problem. "This approach is not in line with current regulatory standards and is actually considered deceptive," Wooten said. "There's no way for either side to prove their case or to determine what the T&Cs were for a given transaction. Had they captured a signature within the sales draft that carried a true chain of custody, it would be a different story - because in the e-commerce fraud space, the signature ultimately rules."

Cloud-based payments set to soar

An Aite Group LLC report, Hey, You, Get Onto My Cloud: Mobile and Cloud Transform the POS, projects cloud-based payment processing volume in the United States will reach $199 billion in 2017, up from an estimated $15 billion in 2012. "Mobile- and cloud-based technologies continue their assault on legacy payment infrastructure," said Rick Oglesby, Aite Senior Analyst and report author. Cost efficiency and enhanced value-added services were cited as key drivers.

POS in transformation

A RIS Retail Solutions Brief: POS Metamorphosis reflects on the radical changes occurring in POS technology and how today's systems must interact with a variety of consumer mobile devices. The brief also discusses how mobility, new payment technologies and omni-channel growth are redefining the POS and offers useful tips for improving mobile payment security.

Payment convergence predicted

An ABI Research report titled Mobile Payments, NFC, and Contactless Convergence predicts near field communication (NFC) mobile payments will rise from $4 billion in 2012 to $191 billion in 2017. The report discusses market convergence between payment types, identifies market beneficiaries, and analyzes current trends, drivers and inhibitors across a host of potential markets that include ticketing, retail and loyalty, and other spheres.