Visa International has announced the local launch of its new online security service, designed to ease concerns surrounding online transactions.
The online shopping industry is enjoying remarkable year-on-year growth, says Visa sub-Saharan Africa GM Chris Winter, but the security risk remains a key concern.
"According to AC Nielson Research, e-commerce transactions in SA increased by 75% in 2003, so there are enormous opportunities there," he says.
"But there are also a lot of inherent challenges. As the online business environment changes, so do security needs. A few years ago, it was difficult to break the security of magnetic stripe cards, but now it`s not," Winter says.
Visa Global e-commerce VP Tim Lee says the Verified by Visa (VBV) service, which monitors and authenticates transactions in real-time, will go a long way towards easing consumers` long-standing fears about transacting online.
"In the consumer polls we have conducted over the last 10 years, we get the same answer every time: there is a fear factor involved with using transactions online, and 30% of people do not want to give their credit card details online.
"We look at VBV as a lock on your door. The bank provides you with the room, and this just provides that extra level of security."
Since its initial release a year ago, there have been no reported phishing attacks on a VBV account, says Lee, although he concedes that Visa would not necessarily be made aware of individual cases.
The company has given special attention to making the service as seamless as possible, says Lee. "It is basically just a credit card with a password. There is no software required, and you don`t really need to do anything different from a normal transaction."
Banking, business bonus
Because VBV uses authentication, the service will also come as good news for the merchant and banking sectors, says Lee. "A recent Gartner study found that authentication has the potential to cut e-fraud losses significantly, so banks will be better protected, enabling them to expand their e-commerce ventures."
From a merchant perspective, there will be a significant drop in chargeback costs, says Lee, pointing to a number of case studies carried out around the globe. "Almost 71% of chargeback costs are a result of consumers denying they carried out a transaction.
"The VBV service provides a liability shift, because it makes cardholders responsible for protecting their password, just like they must protect their PIN number. So now merchants will be able to significantly reduce their chargeback costs."
Winter adds that merchants would be further protected because transactions could be more accurately verified. "A lot of media coverage lately has been about people hacking merchant systems.
"It is very different to be able to hack a banking system. The bank would almost definitely know if their system was breached. If it wasn`t breached, then the responsibility for the transaction would have to go to the cardholder."
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