Online transactions are considered to be "non-face-to-face"
(CNP - customer-non- present) transactions. Since there
is no way of ascertaining the customer's identification,
there is no way to be sure that the customer is the legitimate
cardholder. Therefore, financial institutions are leery
about the high potential for fraud.
Moreover, the major credit card companies
offer their cardholders the right to contest charges on
their statements that may be the result of theft, fraud
or error. A contested charge is referred to as a chargeback.
When a chargeback occurs, the merchant will end up paying
the charge to the issuing bank, in addition to a chargeback
fee. For example, if you sell a book for $20 through a credit
card transaction, and the cardholder later contests the
sale, internet shop will end up paying the bank $20 plus
a chargeback fee of $10 to $30 dollars.
Basically, face-to-face sales (CP - customer-present)
have a chargeback rate of 1% of all sales. When CNP transactions
have a chargeback rate of 2% up to 10% depending on how
risky is the business of the internet site. The potential
for charge backs is greater when it is an online sale, so
the risk to both bank and merchant increases.
How to improve it
When it is CP sales, a shop does its outmost to prevent
possible fraud by the way of ascertaining the customer's
identification if the card matches the cardholder in place.
The cashier of the shop has a time to see the credit card
and ask the shopper to produce his document identifying
CNP sales does not give this chance since the shopper non
present at the counter. Therefore, even when you check the
card you cannot be sure that it is the real cardholder in
front of you.
To solve this problema ASSIST applies a special fraud monitoring
methods based on many years fraud screening expertise. These
methods are applicable for both CP where usually POS-authorization
is used and NCP cases. The truth is you will have to replace
your old fashioned POS with a new intellectual ASSIST-POS.
See more details in ASSIST-Interactive POS section.
Enhanced fraud monitoring
In addition to a standard fraud monitoring offered under
the contract with a bank of ASSIST system (as in case of
Alfa-bank), enhanced fraud monitoring service is available.
The service will be rendered under direct contract with
The enhanced monitoring will include:
- transactions screening to reveal possible fraud;
- generating the fraud presumption % and informing the shop
in Financial Reports account section on ASSIST site;
- notifying the shop by e-mail concerning transactions having
fraud presumption %;
- consulting delivered to an internet shop by e-mail. (requests
to be sent at firstname.lastname@example.org).
Using the enhanced fraud monitoring will allow the shop
to make lower the fraud by 1 to 1.5 per cent of internet
Each transaction is investigated by twenty parameters plus
payment history of the credit card in ASSIST system is considered.
Enhanced fraud monitoring rates*
|Average monthly volume (th.RUR)
|up to 100
|between 100 and 200
|between 200 and 400
|higher than 400
||to be agreed
* All rates without VAT.
It is considered that one of the most safe transaction protection
from fraud is using a pin-code to identify the cardholder
by the issuer bank of the card. Same way it is used in ATM.
Looks like e-commerce payment using the pin but here the
cashier is missing instead of the shopper.
Clear that using the pin will only increase the safety level
Assist®ID is not just a code but a 16 digits combination
built in a certain way plus 4-digit pin-code. It is presumed
that same as in case of ATM transaction the card holder
will keep the code in secret. Since the Assist®ID is "bound"
to credit card data, you can make payment using Assist®ID
and the pin-code, which will cut down the risk of using
the stolen credit card number dramatically. Before thecardholder
gets his/her Assist®ID and pin-code his/her card is checked
at issuer bank and payment history records are checked as
well as many other data. This will cut down on fraud risk
in case of stolen credit card number or generated numbers.
See more information about Assist®ID here.
One more time about the fraud
The way of fighting with fraud described in section above
has nothing to do with cases when a "descent"
card holder refuses from transaction he/she done indeed.
It happens from time to time in both CP and NCP situations.
These cases are treated (and one needs to note that sometimes
these guys are lucky) by Economic Crimes Prevention Institutions.
The only thing is that in case of offline store it is some
way easier (since the slip is printed and signed) and more
difficult when it is online store. The truth is Assist®ID
will have to cut down on that fraud because using Assist®ID
psychologically the shopper will be more responsible when
The certainty of punishment is the truest security
against crimes. --Fisher Ames.
You can get much more information on this issue at Economic
Crimes Prevention Institutions. Some of them are here below:
9, Vedernikov, Moscow, 109029
???. +7 (095) 270 0033
3, Mytninskaja, St.Petersburg
Russia ???. +7 (812) 274-50-17
3D-secure from VISA
One of possible solutions to reduce number of cases when
a "descent" cardholder refuses from transaction
he/she made in internet is 3D-secure technology presented
by VISA (ucaf in case of Europay). To tell the truth, the
technology itself does not solve the whole problem. To operate
full steam it will have to cover all parties such as cardholders,
issuer banks, acquires and merchants. The foundation stone
of the technology is that responsibility for chargeback
in transaction under 3D-secure standard is shifted from
the internet shop to issuer bank which in turn shifts it
on card holder since the transaction is supposed to be completed
according to 3D-secure standard with the help of secret
code shared between the card holder and the issuer bank.
See in more detail with www.visa.com.
3D-secure standard is supported by one of ASSIST member
banks - Alfa Bank and can be used for online transactions