150m reasons a day to stop fraud at the checkout

Security is a big deal for us consumers. That’s why we invest in gatemen and guards for our homes and expensive anti-virus software for our PCs. Despite that, how many of us have actually paused to consider what happens after we pay with our credit or debit cards at the checkout? Where does our information go to? Or, who is protecting it? In just a few short seconds after handing over our card, we’ve paid and gone on our way, with little thought to the process that takes place behind the scenes.

Behind each transaction is actually a carefully orchestrated process. When a Visa cardholder uses a card to buy a pair of shoes, it’s actually the acquirer — the merchant’s bank — that pays the merchant for the shoes. Then, the issuer — the cardholder’s bank — reimburses the acquirer, usually within 24 to 48 hours. Last, the issuer collects from the cardholder by withdrawing funds from the cardholder’s bank account if a debit account is used, or through billing if a credit account is used.

With all the linkages and players involved, you might wonder about the security of it all. How does the system detect that it’s really you, the genuine cardholder, who is making the purchase? What happens if you lose your card? Will a thief be able to conduct a fraudulent transaction using your information with the same ease and speed?

The art of fraud prediction

The next time you pay with your card, pause and consider how your bank decides whether or not to authorise your request. All transactions must go through a payments processing network such as VisaNet, a robust and secure system that ensures that your payments are not just fast and reliable, but safe too. Sophisticated risk management services within the payments network ensure that every player in the payments ecosystem is protected – from cardholders like you, to merchants and banks – from losses due to fraud, theft, or unauthorised use of debit, credit and prepaid cards.

Chances are your bank depends on risk management services such as Visa Advanced Authorisation that monitor transactions, detect any unusual spending patterns and flag possible fraud – all in real-time. The payments network analyses thousands of examples of valid purchase transactions and constantly updates account transaction patterns so that future purchases can be evaluated against the most current information.

So, for example, if you only ever use your card to purchase online music, a transaction for an expensive widescreen HD television, perhaps in another country, would be identified by the payments system as unusual. A rating of that transaction’s potential for fraud is then sent to the card issuer, your bank, including information on whether it was part of a reported third-party data security compromise.

With this information on hand, your bank can respond immediately to the merchant on whether to accept or decline the transaction. If suspicious, your financial institution may choose to temporarily put charges on hold, notifying you as soon as possible to verify the legitimacy of the charges. This is important, because the ability to analyse transactions in real-time helps stop fraud at the checkout – even before it takes place!

At Visa, the reliability and security of every one of the 150 million transactions processed each day lies with VisaNet, the world’s largest retail electronic payments processing network. Every day, VisaNet connects up to 2.1 billion cards, millions of acceptance locations, 2.0 million ATMs and 14,800 financial institutions. This translates to more than US$6.5 trillion in global consumer spend on our products every year. That’s a huge responsibility on our shoulders, and we know we can never take this trust for granted.

Criminals and fraudsters never stop. They are smart, nimble and determined – moving quickly to take advantage of new opportunities to perpetuate fraud.

This is why we have invested heavily in new technologies and innovations – from encryption of data to chip technologies – to make sure we are always one step ahead. Ours is a system that is consistently and constantly upgraded to provide new services, enhancements and capabilities that consumers expect. Visa also collaborates with the broader payment community on innovative data security techniques, authentication solutions and technologies and fraud prevention strategies to keep payments safe. This is why over the past five years, even as global transaction volume has increased dramatically, global fraud rates have remained near historic lows.

So the next time you see the word ‘approved’ appear on the Visa card terminal in front of you, you know that your payment has been made not just successfully, but securely too.

Ade Ashaye