Visa Inc. is helping U.S. fuel retailers prevent credit and debit card fraud at the pump with intelligent analytics that identify higher-risk transactions that may be fraudulent.
While global fraud rates across the Visa payment system remain near historic lows—less than six cents for every $100 transacted—fuel pumps can be targets for criminals because they are often self-service terminals. The new solution, Visa Transaction Advisor (VTA), enables merchants to use real-time authorization risk scores to identify transactions that could involve lost, stolen or counterfeit cards. A pilot test of the new service showed a 23% reduction in the rate of fraudulent transactions—all without costly infrastructure upgrades or disruption of the customer experience.
“Visa Transaction Advisor uses sophisticated analytics based on the breadth and scale of VisaNet data to flag the riskiest transactions,” said Mark Nelsen, vice president of risk products and business intelligence, Visa Inc. “By working with fuel companies to understand their needs, we were able to create a new service that builds on Visa’s predictive analytics capabilities, providing fuel merchants with more intelligence to prevent fraud and improve their bottom line.”
How It Works
After a cardholder inserts the card at the pump, Visa analyzes multiple data sets, such as past transactions, whether the account has been involved in a data compromise, and nearly 500 other pieces of data to create a risk score. This allows merchants to identify those transactions with a higher risk of fraud and perform further cardholder authentication before gas is pumped.
The time and costs associated with resolving fraudulent transactions can be substantial for both merchants and financial institutions and inconvenient for cardholders, which is one of the reasons why fraud prevention is critical. Visa’s solution is easy to implement—using existing message fields and formats as well as pump software or hardware to ensure minimal impact to merchants and acquirers.
Several fuel merchants who piloted the technology over the last several months noticed a decrease in fraud, without negatively impacting their consumers’ experience.
“We are excited about VTA as a tool to help mitigate fraudulent transactions. We saw a 23% reduction in the rate of fraudulent chargebacks during our Los Angeles pilot program,” said Gabriel Andres Porras, merchant acquiring manager, Chevron. “This was done with minimal impact to the customer experience, making secure payment at the pump as convenient as possible.”
“We provide fuel to millions of customers each month through approximately 15,000 service stations in the U.S.,” said Mike Swillo, U.S. credit card operations manager, from Shell. “When we consider new solutions and technology it has to have a clear business benefit, be customer-centric, and easy to implement. With no infrastructure investment, we are testing VTA as part of our proactive fraud prevention tool-set to better identify fraudulent card activity earlier in the transaction cycle, without inconveniencing our customers.”
Visa Transaction Advisor is available to merchants through participating U.S. acquirers. Visa has partnered with Vantiv and is also working with other acquirers to offer the service to its fuel clients.
“Ease of implementation is a critical requirement whenever we’re talking about a new merchant service,” said Donald Boeding, president of merchant services at Vantiv. “Visa Transaction Advisor builds on existing payment infrastructure, is easy to implement and flexible enough to allow customization by merchants, which is why we are excited to be the first acquirer to offer it to our oil merchants.”