FOSTER CITY, Calif. -- As retailers grapple with migration to new EMV data-security standards, Visa Inc. has announced that an internal analytics service it offers convenience-store and petroleum-retail operators can cut the rate of fraudulent chargebacks by more than half.
As part of the move to Europay MasterCard Visa (EMV), fuel merchants are working to implement chip readers at fuel pumps. While fuel merchants work on their plans, the service, Visa Transaction Advisor, provides what Visa officials call “a bridge solution, enabling merchants to identify and block high-risk transactions before being processed.”
With more than 35,000 gas stations actively using the service in the United States, users on average have seen fraud decline by 54% with counterfeit-fraud rates and a 51% drop in lost-and-stolen fraud chargeback rates, Visa said in a statement.
“What makes Visa Transaction Advisor so effective is that it helps block criminals before they can even pick up the pump,” said Rich Steckroth, director of business development for Sheetz Convenience Stores, Altoona, Pa. “This helps us to maintain a great customer experience while still managing for fraud.”
In that statement, officials from Foster City, Calif.-based Visa said that after a cardholder inserts the card at the pump, the company 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 within seconds. This allows merchants to identify those transactions with a higher risk of fraud and perform further cardholder authentication before anyone pumps gas. Visa research has shown that when a fraudster is asked to go inside and see a store employee to complete a transaction, they will typically drive away instead.
“Visa Transaction Advisor gives fuel retailers a tool for applying Visa’s real-time fraud insights to transactions at the gas pump,” said Mark Nelsen, senior vice president of risk products for Visa. “The results we’re seeing in the fuel sector attest to the power of predictive analytics for many of our merchant partners. It’s an effective model for combating fraud and one we hope to replicate with other merchant categories.”
Officials with Visa say the solution is easy to implement. It uses existing message formats, pump software and hardware. The implementation is typically done at the national brand level, requiring very little work from local franchise locations. Today, the service analyzes more than 76 million transactions each month.
Visa has partnered with a number of U.S. acquirers to deliver the service and can also work directly with merchants to implement Visa Transaction Advisor as part of their fraud-management system.
There are several features unique to fuel retailers that make them an attractive target for today’s criminals, Visa officials said. Outdoor pay-at-the-pump terminals are an ideal place for criminals to test the usability of stolen or counterfeit cards without the risk of interacting with a store employee. Because they can resell gasoline with little depreciation in its value, criminal rings will often use fraudulent cards to purchase large quantities of gas, which they can sell to willing buyers for cash.
“We were able to set up the service quickly, using existing infrastructure, and saw immediate results,” said Gabriel Andres Porras, merchant acquiring manager for Chevron, San Ramon, Calif. “This tool is helping to protect our business from fraudsters at more than 8,000 retail locations across the U.S.”
"It seamlessly integrates with our other risk-management strategies and provides added protection for merchants without inconveniencing our customers," said Mike Swillo, U.S. credit-card operations manager for Shell, Houston. “We’re able to provide added security at our fuel pumps, which protects our customers, station operators and the brand.”
Visa is a global payments-technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to secure electronic payments. It is capable of handling more than 65,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants, the company said.
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