Half of Visa's disputes, fraud from e-commerce

Although only two per cent of Visa International's credit card business relates to Internet transactions, 50 per cent of its disputes and discovered frauds are in that area, according to the company.

It is consumers who are responsible for most of the disputes and fraud, not merchants, Mark Cullimore, director of emerging technology at Visa International Asia-Pacific, said at the Second Roundtable on E-Commerce in Asia.

"This has become a significant issue for our industry over the past six months," he said. "It is all down to the problem of authentication, which has become the most important issue in the financial industry."

Cullimore said that disputes over transactions are more common than outright fraud, a common case being consumers denying they had ordered goods or services from sites, especially so-called brown-wrapper sites -- those which at the customer's request disguise their identity on credit card statements. Other common complaints include consumers saying they had not got what they ordered, or that the goods were delivered late, or that there were extra charges.

"Consumers worry too much about fraud on the Internet, and merchants don't worry enough," Cullimore said. "Some merchants have told us they have had to triple the size of their dispute departments."

Cullimore said that security technologies such as SSL (Secure Socket Layer) could adequately prevent eavesdropping and manipulation of online messages and transactions. But SSL could not help with the authentication problem, he said. However, the SET (Secure Electronic Transaction) protocol, along with recognised Certification Authorities (CAs) for issuing digital signatures, could assist in solving the problem, he added.

"There is very little SET use at the moment, and the bulk of the traffic is just encrypted," Cullimore said. "We need laws and technology in this area, and we need governments to stand behind CAs."

Cullimore said that the e-commerce community needs to build trust among merchants and consumers, something which is notably lacking at present. According to Visa research, only 5 per cent of consumers currently trust e-commerce, compared to 57 per cent who trust PC banking, 62 per cent who trust telephone banking, and 77 per cent who trust automatic teller machines.

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