Visa introduces real-time scoring

Visa will start a phased deployment of the new anti-fraud system in the spring

Payment system, Visa Europe, has introduced real-time scoring to its risk detection platform in a move to enhance the accuracy of data provided to banks in fraud detection processes.

The new solution, imaginatively dubbed real time scoring (RTS), is an improvement to Visa’s current platform and is designed to reduce the total cost of fraud and to improve detection rates.

By better tracking fraudulent transactions and eliminating unnecessary transaction declines, the company also hopes to improve customer experience.

“We want to offer better tools so that banks can make better decisions and genuine cardholders have their transactions approved every time. If they don’t, they will know their security is being looked after by their bank,” said Visa Europe’s senior vice president of fraud management, Kevin Smith.

"The rollout of RTS brings fraud detection to a new level and is crucial to ensuring the industry stays ahead of criminals. The flexibility of the system allows for minimal infrastructure change for our member banks, and allows them to tailor a set of scoring rules to fit with their operational policies or customer considerations,” said Smith.

For the upgrade of the platform, Visa chose to remain with its existing supplier, fraud detection specialist Fico following discussions with other vendors including Actimize and SAS.

The revamp will be based on Fico’s latest engine Falcon 6, in addition to a suite of reporting tools to be used in combination with the firm’s existing authorisation and clearing systems.

“We recognise that fraud protection is a tool that supports innovation in other areas and enables new business opportunities in areas such as loyalty, rewards and marketing, for example,” Smith told Computing.

The platform will be prototyped with two European issuers from next month, with the launch in spring 2010 followed by a phased development.

In April, the first release of the real-time system will see the provision of risk scores to banks as transaction authorisations are requested.

The tool is based on behavioural modelling technology and allows issuers to incorporate the data into their systems and helps firms determine whether to authorise, decline or refer the transaction.

In the second release, planned for July, case management – a stage in fraud management where issuers monitor transactions that are scored on the limit of risk criteria – will be provided to Visa’s member banks to help them optimise their back-office procedures and prioritise claims that need to be analysed.

The final release will go live in October 2010 and aims to equip banks that don't have their own fraud management systems with real-time scoring capability.

According to Visa, firms will then be able to tailor the system to focus on particular portfolios targeted by fraudsters.

According to Smith, the system will not compete with other credit services and decision analytics services – such as those offered by Experian – but act as a complementary tool to fight fraud specific to Visa card activity.

Visa Europe’s innovation budget exceeds €19m, with projects related to security representing approximately half of that amount. Additionally, the company works in co-operation with its member banks also investing in their own fraud processing capability.