An Rx for the Chargeback Blues?

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.

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