ad info

 
CNN.com  technology > computing
    Editions | myCNN | Video | Audio | Headline News Brief | Feedback  

 

  Search
 
 

 
TECHNOLOGY
TOP STORIES

Consumer group: Online privacy protections fall short

Guide to a wired Super Bowl

Debate opens on making e-commerce law consistent

(MORE)

TOP STORIES

More than 11,000 killed in India quake

Mideast negotiators want to continue talks after Israeli elections

(MORE)

MARKETS
4:30pm ET, 4/16
144.70
8257.60
3.71
1394.72
10.90
879.91
 


WORLD

U.S.

POLITICS

LAW

ENTERTAINMENT

HEALTH

TRAVEL

FOOD

ARTS & STYLE



(MORE HEADLINES)
*
 
CNN Websites
Networks image


Online merchants brace for holiday credit card fraud

InfoWorld

(IDG) -- Fraud-prevention measures for online payment systems could become more than an afterthought to many e-tailers when the Web holiday sales surge hits full stride and transaction volume levels rise.

Despite being squeezed by higher credit card fraud rates and fees as much as 18 times higher for virtual transactions than those in the physical world, many online retailers struggle to find affordable fraud-protection software or services alternatives, said Avivah Litan, an analyst at Stamford, Conn.-based market research firm Gartner.

"It's like a schizophrenic story. It's their No. 1 concern, but it's the bigger companies who can do something about it," Litan said. "Sometimes the cost of implementing these systems is higher than [credit card] fraud service and, depending on the price guarantee, small merchants might not want to buy it."

MORE COMPUTING INTELLIGENCE
IDG.net   IDG.net home page
  InfoWorld home page
  E-tailers brace for online holiday rush
  Troubling patterns in stolen e-commerce data
  Cisco moves to secure e-businesses with Safe
  Reviews & in-depth info at IDG.net
  E-BusinessWorld
  TechInformer
  Questions about computers? Let IDG.net's editors help you
  Subscribe to IDG.net's free daily newsletter for IT leaders
  Search IDG.net in 12 languages
  News Radio
  * Fusion audio primers
  * Computerworld Minute

According to Litan, online merchants pay credit card companies an average fee of 2.5 percent of every transaction as well as a fee of between 20 cents and 30 cents. E-tailers must absorb all charge-back costs -- as much as four times more than physical world costs -- and pay 22 cents per transaction for fraud protection using transaction-risk scoring services.

CrediView, a Menlo Park, Calif.-based ASP (application service provider) start-up, launched this week and joined ClearCommerce, CyberSource, Digital Courier, and Mindwave Software as providers of transaction-risk scoring solutions, but with a unique twist.

The company's eCredible Guaranteed service guarantees users 100 percent against any charge back if it rubber-stamps the transaction, said Ron Rymon, president and CEO of CrediView.

CrediView's eCredible Guard service, based on a per transaction or fixed monthly fee, provides calculated risk scores to the merchant for approval -- without a guarantee.

Experts say online merchants are helping themselves by gradually building up their defenses against Internet credit card fraud.

"They are looking for certain red flags, verifying addresses, looking for certain behaviors that are tip-offs to fraudulent transactions," said Barry Parr, an analyst at IDC.

But Egghead.com is confident in its internally developed, everyday fraud-detection measures and is not adding anything else for the holidays.

"Every transaction goes through the mechanism and looks at [it] as if the consumer has done a fraudulent transaction before, determines whether the credit card is fraudulent, and looks at other factors," said Leslie Benson, senior vice president of finance at the Menlo Park, Calif.-based online retailer.

However, no procedure is perfect for online payment systems that electronically identify the potential buyer.

"If it's a card-not-present transaction, you can see how there is a greater likelihood for fraud," said Scott Silverman, vice president of Internet Retailing at the National Retail Federation, in New York.




RELATED STORIES:
House panel explores electronic billing
September 22, 2000
Banks announce release of Visa 'smart' cards
September 18, 2000
Visa, MasterCard plan anti-fraud initiatives
August 21, 2000
Visa issues 10 'commandments' for online merchants
August 15, 2000
Digital signatures create market potential
July 31, 2000

RELATED IDG.net STORIES:
Troubling patterns in stolen e-commerce data
(NW Fusion)
Dispute sparked on Internet retail fraud
(Computerworld)
Cisco moves to secure e-businesses with Safe
(NW Fusion)
E-tailers brace for online holiday rush
(InfoWorld)
E-commerce security alliance formed
(IDG.net)
Visa & MasterCard take aim at credit-card fraud
(NW Fusion)
Survey finds U.K. Net retailers easy theft targets
(IDG.net)
Net-fraud complaints are largely about auctions
(IDG.net)

RELATED SITES:
CrediView, Inc.
Egghead.com
CyberSource Corporation
Mindwave Software

Note: Pages will open in a new browser window
External sites are not endorsed by CNN Interactive.

 Search   

Back to the top   © 2001 Cable News Network. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines.