Visa Credits Surge in Web Volume to Its Authentication Program

Visa U.S.A. reported today that the dollar volume of transactions occurring on its cards on the Internet through the first five months of 2004 is running ahead of the gain seen in calendar 2003. Through May 31, Visa's e-commerce volume on credit and debit cards jumped 59% over the year-ago period, while its dollar volume in 2003 grew 53.2%, reaching a total of $60.4 billion. Visa reports that online transactions increased 44.5% last year, to 722 million, making for an average ticket of $84. Visa credits its 3-year-old online security program, Verified by Visa, in large part for the accelerating growth in Internet volume. It says 17,000 online merchants now enable the cardholder authentication program on their Web sites, with some prominent Web merchants joining the list recently, including CompUSA, JetBlue Airways, Digital River, and 2Checkout.com. To promote acceptance of Verified by Visa among merchants, Visa relieves merchants of liability for chargebacks stemming from fraudulent online transactions, including cases when consumers or issuing banks aren't participating in the program, though Visa says in these cases there are “limited exceptions.” The card network has also cut 5 basis points from its interchange rates for e-commerce transactions covered by Verified by Visa. To build consumer awareness of and enrollment in the program, Visa has begun a seven-month online advertising campaign running on portal, news and shopping sites, including AOL, Disney, CNN, and Shopping.com. Currently, 9,000 Visa issuers around the world offer Verified by Visa to a cardholder base of some 250 milllion, but consumers must enroll in the program through their banks to use it. Visa's total worldwide issuer base stands at 21,000. With chargeback rates running well in excess of 1% on Internet transactions, Visa International and MasterCard International have for some time been pushing a form of online cardholder authentication, called 3D Secure, that is intended to make cardholders, issuers, acquirers, and merchants feel confident that Web payments are legitimate. But the cost of implementing 3D Secure has been a stumbling block for acquirers and merchant processors, slowing adoption of online authentication. Both Verified by Visa and a similar system offered by MasterCard, Securecode, are derived from 3D Secure and work by presenting consumers with a screen during checkout on e-commerce Web sites that asks for a password to secure transactions.