International payment
solutions, secured by fraud management technology
Contributed by First Atlantic
Commerce, Bermuda
| A growing
number of eCommerce merchants are looking
to expand into foreign markets, but growing
from a domestic online business to a global
one often sends panic across the top-level
of an organization.
Merchants
looking to expand into international waters
not only need to adapt to the culture
and their buying habits; they also need
to accept multiple currency credit card
transactions from their respective markets
to satisfy their customers’ currency
choices.
As such,
globally expanding merchants will require
international payment solutions that can
offer multi-currency presentment to the
merchants’ customers, and multi-
currency settlement to offset any foreign
exchange loss incurred by the merchants.
(Like-for-like multi-currency solutions
are relatively rare in the industry, with
many merchants signing up for payment
services that require the more expensive,
and technically cumbersome, dynamic currency
conversion to get to their desired ‘end’
settlement currency.)
Keep in mind
also that the free movement of people,
goods and capital in the context of a
global economy and especially, within
the European Union, continues to encourage
competition in business, and affords global
merchants the ability to set up in countries
with the lowest prices and advantageous
tax rates.
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International
payment solutions therefore, will need to fit
with the merchant’s corporate strategy
and provide the type of sophisticated, integrated
payment processing solutions needed to aid in
their global expansion.
In addition, as
merchants grow their business, they will need
to further manage online payment fraud and mitigate
their chargeback risk through fraud control
technologies.
Fraud
Detection Technology
Payer authentication systems provide issuing
banks with the ability to authenticate cardholders
during an online purchase, which reduces the
likelihood of fraudulent use of payment cards
and improves transaction performance. This ultimately
benefits merchants, consumers and bank acquirers
-- not just financially, but in terms of service
levels, building loyalty and encouraging repeat
orders.
It is a known fact
that the Card Association 3-D Secure™
payer authentication services known as Verified
by VISA and MasterCard SecureCode™ (processes
that enable issuing banks to verify that the
actual cardholder is the person executing an
Internet purchase) provide for instant fraud
reduction.
Yet, according
to Cybersource’s UK Online Fraud report
2007, only 49% of retailers are using 3-D Secure™
services, which transfers liability for certain
chargebacks to the issuing bank rather than
to the merchant.
The same study
indicated that online retailers continue to
rely on the same basic tools to manage fraud
with more than 70% using Address Verification
(AVS) and Card Verification Number (CVN) as
their primary means of fraud screening.
Using AVS and CVN (which includes CVV2 for VISA
and CVC2 for MasterCard) is an important tool
in mitigating risk. In fact, it should be noted
that AVS technology is not only useful for North
American based merchants; it is a valuable tool
for global merchants that do business in North
America as they can employ AVS to assist with
mitigating US and Canadian cardholder fraud.
They can also monitor these customers should
they want to block them from processing.
But AVS and CVN
must be complemented by other fraud detection
technologies to effectively mitigate fraud and
chargebacks for merchant online businesses.
3-D Secure is currently
the single most important fraud-screening tool
that should be implemented by merchants.
And to strengthen
the argument, while Verified by VISA (VBV) liability
shift has always been guaranteed for ‘attempted’
transaction authentication -- even if the cardholder
is not enrolled in Verified by VISA with their
bank issuer, MasterCard SecureCode did not cover
the ‘attempts’ liability shift.
But in November, 2006, MasterCard International
announced a global inter-regional merchant liability
shift programme change, which covers all international
SecureCode transactions under the merchant ‘attempts’
liability shift.
All merchants then
benefit from worldwide chargeback liability
shift on disputed payment transactions if they
are enrolled in Verified by VISA and MasterCard
SecureCode™ and have made an attempt to
authenticate the cardholder prior to payment
authorization.
IP geolocation
is also a very good addition to a merchant’s
fraud screening portfolio. Used to identify
the geographic origin of an order based on the
IP address of the customer’s browser,
geolocation data provides specific information
about the IP address associated with the originating
browser transaction request such as the country,
city, region, zip code, and domain name.
Not only can it
assist merchants in ascertaining the geographic
location of their customers and thus likelihood
of fraud (as certain countries are more notorious
for fraud than others), it allows the merchants
to use the information for marketing purposes
or advertising relevant product information
according to that geographic region.
Choosing
an international payment solutions provider
Merchants must choose wisely when looking to
work with a payment solutions provider. Experience
in the international market, reliable payment
gateway services, payer authentication offerings
and other fraud detection tools are paramount.
Depending on their
needs, merchants should also look for other
value-adds from their payment processing providers
including personal service, ease of integration,
and trouble-free access to settlement funds.
Merchants should
give careful consideration to the corporate
framework of any payment solution. For example,
many ‘offshore payment solutions’
are dependent on the ‘aggregator’
model, whereby businesses do not have the ability
to actually control their settlement funds from
the time those monies are processed and captured.
Solutions that
provide for direct merchant accounts with major
banking institutions, however, are the ones
that will likely provide greater expansion flexibility
and control. And merchants who gain approval
for credit card processing settlement accounts
often go on to enjoy much larger relationships
with their overseas banks, most of which provide
a comprehensive portfolio of other banking services.
Single integration
with a payment gateway for multiple bank access
is also key and not often found in the industry.
It makes sense for large merchants to send their
internet payment transactions via one ‘gateway’
with settlement accounts across various banks
and jurisdictions so that if there are, for
example, ISP issues to a given bank and/or jurisdiction,
the ‘volume’ can temporarily and
easily be shifted to another acquirer on the
switch.
Merchants should
keep this in mind when exploring their options
as they will likely look to multiple banks in
multiple jurisdictions across the globe as they
grow their business -- both for redundancy purposes
and corporate strategy planning.
First Atlantic
Commerce (FAC)
FAC, a leading offshore payment solutions provider,
offers international, full multi-currency payment
services and Verified by VISA and MasterCard®
SecureCode™ payment solutions featuring
chargeback liability shift for EUROs, US Dollars,
CDN Dollars, Pounds Sterling, Hong Kong Dollars,
Yen, Singapore Dollars, South African Rand,
and Australian Dollars.
Based on the Card
Associations' 3-D Secure™ technology,
cGate®SecureVerify, FAC's PCI compliant
service for Verified By Visa and MasterCard®
SecureCode™, provides Internet merchants
and bank acquirers with protection from fraudulent
transactions, chargebacks and unauthorized payments
made through a web site.
FAC also works
closely with banks and merchants to ensure all
parties have a high level of awareness regarding
potential fraud. Several fraud detection devices
are available though FAC, and the merchant can
even employ fraud screening methods such as
AVS and IP Geolocation without having to move
from their current gateway providers.
Our AV-yeS pre-authentication
and IP Geolocation services can be used as part
of our gateway service offerings or as an addition
to the merchant’s existing processing
structure. They are easy applications and the
merchant can be up and running within 48 hours.
Payment solution
providers like FAC are a perfect fit for merchants
looking for a competitive edge, while growing
their business. We have the experience needed
to leverage the benefits of a global environment
with multi-currency, multi-jurisdictional settlement,
as well as 24x7 technical support, and fast
and easy integration.
But also, we provide
a truly personalized service -- and that is
a rare commodity in this business.
For more information,
please visit www.firstatlanticcommerce.com
Contact
First Atlantic Commerce:
Tel:
+1 441 296 5598 or +1 441 294 4625
Email: info@fac.bm
or tlineshill@fac.bm
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