A "significant" discount

Visa and CyberSource said Wednesday that they will collaborate on a system aimed at helping merchants prevent fraudulent purchases made over the Internet. The two companies will strive to improve the existing CyberSource Internet Fraud Screen and market it to financial institutions and merchants. The system will calculate more than 100 risk factors and provide a "score" to merchants in real-time that represents the likelihood of fraud for each pending online transaction. Visa and CyberSource said that will enable merchants to better manage the risk of selling their wares over the Web. Visa said it will give merchants who use the system a "significant" discount off the approximately 2 percent-3 percent it charges them to process credit card transactions. Jim Degracia, senior vice president for electronic commerce at Visa, said fraud rates for online sales are .09 percent, slightly higher than the .08 percent for offline sales. With $610 billion in total credit card sales last year, that works out to more than $500 million in fraudulent sales made through both physical and virtual channels.