Visa has recently rolled out its Transaction Advisor fraud detection platform to gas stations, according to an article in the Washington Post.
“The software analyzes 500 pieces of data, including location and past transactions, in less than a second. Based on that data, the software creates a risk score on a scale from zero to 99. The higher the score, the higher the risk that the card in use is stolen. Each gas station gets to set a risk threshold, say 50 on that zero-to-99 scale. If your card generates a risk score that exceeds the threshold, a message will flash at the pump for you to see the attendant inside the station,” said Mark Nelsen, Visa’s vice president of risk products and business intelligence. ‘If a fraudster gets that message, they’re going to drive away. The genuine consumer is going to go to the attendant to finish the transaction.”
Chevron has been among those at risk. The company has activated it at several locations and has reported a 23% decline in fraud during the roll out. Visa charges acquirers a fee to support the service, who can then determine the price to charge merchants.
Transaction Advisor is an example for why the U.S. has not migrated to EMV as quickly as other countries. U.S. networks, issuers, and acquirers have consistently demonstrated an ability to use transaction and other account information to prevent fraudster from making unauthorized transactions with counterfeit, lost, or stolen payment cards. The card networks’ EMV liability shifts for gas stations (which also impact counterfeit, lost, and stolen payment cards) go into effect in 2017. If Transaction Advisor proves successful, it will be interesting to see how it impacts the petroleum industry’s plans for EMV adoption.
The solution’s 0-99 risk score is also an interesting concept and it raises several questions. Should issuers also have access to the score when making an authorization decision? How will a merchant’s decision to accept or an issuer’s decision to authorize a transaction based on the score impact existing liability frameworks? A network-promoted transaction risk score also introduces the possibility of risk-based interchange pricing, which would be an enormous shift in the four-party networks’ business model.
To go read the full story, go to the Washington Post.