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MasterCard International and VeriSign are teaming up to cut the risk of online fraud for e-commerce merchants by integrating some of their technologies.

The deal calls for VeriSign to offer access to MasterCard's Universal Cardholder Authentication Field (UCAF) program to up to 75,000 merchants in an effort to further secure their online transactions.

Fraud and fear of fraud on the part of merchants has long been one of e-commerce's dirty little secrets.

In fact, more than $700 million in online sales were lost to fraud in 2001, representing 1.14 percent of total annual online sales of $61.8 billion, according to GartnerG2.

The new joint effort is part of Purchase, N.Y.-based MasterCard's overall strategy to increase the security of online payment transactions and part of Mountain View. Calif.-based VeriSign's Trusted Commerce program, which aims to do much the same.

Credit card companies have a long-standing policy of "zero liability" for consumers who report fraud incidents in a timely manner. However, merchants, especially online merchants, are often left paying charge-back fees.

Now, according to MasterCard, the UCAF program means that online merchants will benefit from a payment guarantee that is equivalent to a signed sales receipt in the physical world when participating issuers authenticate their cardholders and authorize the transaction.

VeriSign's payment gateway services function like an electronic card swipe terminal, offering a connection between online merchants and financial networks. Under the MasterCard UCAF program, in the event of a successful fraud effort, banks are more likely to be held financially responsible, and merchants less likely.

UCAF is a 32-byte field with a variable data structure that is useful to support any number of authentication approaches to cardholder identities, including: MasterCard's Secure Payment Application (SPA), biometrics, digital certificates, smart cards and even mobile and pervasive devices support.

MasterCard's UCAF infrastructure allows customer data to be transported between participating merchants, acquirers and issuers through a series of hidden fields. It offers an extra level of protection by allowing customers to type in personal identification numbers along with their credit card numbers and other personal information when buying goods online.

VeriSign says it processes approximately 25 percent of all online transactions in the United States. MasterCard says its SPA proram and UCAF are projected to significantly reduce chargebacks.

"Equipping VeriSign's ... online merchant base with the UCAF infrastructure will be a major step forward in building MasterCard's global momentum for guaranteed payments," said Steve W. Orfei, senior vice president for e-commerce at MasterCard.

"... we're arming merchants and consumers against those who would steal payment cards and perpetrate fraud," said Barry McCarthy, vice president and general manager of VeriSign Payment Services.