Does Visa Hold the Answer to Chargebacks?

29 June 2001
IGN has learned that Visa International is close to launching a secured e-payment solution that could change the way transactions are done on the Internet.

The key to the company's new Authenticated Transaction System is the protection of chargebacks.

According to an anonymous expert in the field of Internet credit card processing, Visa has developed a system that is sure to catch on with online retailers and operators.

A Visa International spokesperson didn't return calls to IGN regarding the new system, but Catherine DeMaria, Visa's product manager for e-commerce and authentication development did confirm the company was working with an authentication transaction system.

IGN's source said the system is still one or two years away from taking off and becoming mainstream, but admitted the company may be close to making its plans public.

Past attempts by credit card companies to curb the amount of chargebacks proved futile for online retailers because there was no incentive for them to participate in systems that were developed in the past. The authentication process would give the acquiring agent of a transaction protection from chargebacks and other instances of fraud.

The new system, according to the source, would be able to authenticate any transaction done on the Internet. The system is being developed with a global scope and will be implemented worldwide.

Currently online retailers and operators who accept credit cards through their sites are open to chargeback fees and paybacks, which cut into the bottom line.

The key to online transactions today is a Secure Socket Layer (SSL) connection. An SSL line enables customers to enter their credit card information online without letting a third party tap into the line. SSLs do provide a certain amount of security for the consumer, but the retailer is still vulnerable to chargebacks.

Since online transactions--even those done over the phone--cannot be verified with a signature like traditional face-to-face transactions, they don't have the same protection from chargebacks. The online community has long since struggled with ways to better protect itself from credit card fraud and charge backs.

Exact details of the system are not known, nor is it clear when Visa will choose to go public with details on the new technology.