FRAMINGHAM (08/11/2000) - Online merchants are liable for hundred of millions of dollars worth of fraudulent purchases each year, but few flat-fee payment services screen for credit-card fraud at the point of purchase.
Mountain View, Calif.-based VeriSign Inc. this month launched a new flat-rate fraud-screening service that detects bogus charges in real time while processing payments.
"The innovative thing is pricing," said Joseph Marino, an analyst at Current Analysis Inc. in Sterling, Va. "Payment fees are commoditized, and payment companies realize they can't be viable unless they offer fraud screening. This puts downward pressure on payment costs."
VeriSign's Payflow Fraud Screen service is based on the eFalcon fraud-scoring technology developed by HNC Software Inc. in San Diego. The eFalcon technology has been used for 10 years to protect credit-card holders when making off-line purchases. Payflow has been integrated with VeriSign's Payment Services, permitting merchants to complete authorization and fraud evaluation on Internet credit-card purchases with one request.
Merchants using VeriSign's Payflow Pro payment service are charged a monthly fee of $59.95 for as many as 5,000 transactions per month. The Payflow Fraud Screen costs $39.95 per month at the same transaction rate. The combined package sells for $100 per month. Additional transactions are 15 cents each.
Marino noted that a number of companies, including CyberCash Inc. in Reston, Va., and Equifax Inc. in Atlanta, have recently partnered with HNC for use of the eFalcon technology. But the Payflow pricing should give competitors pause, he said.
"Anyone else who has partnered with HNC should be up in arms and should go and renegotiate their contracts," Marino said.