Credit card giant Visa has debuted a security software solution that allows users to authenticate online card purchases in a bid to cut down on fraudulent transactions.
Industry commentators have warned that criminals are increasingly following shoppers online, and Internet-based fraud is likely to increase during the festive season.
ITWeb reported last week that credit card fraud had increased by just over half this year; and illicit transactions perpetrated without cards being present are gaining momentum.
The South African Banking Risk Information Centre says the banking sector's loss from credit card fraud was 53% higher for the year to end-September 2011. Total losses to the sector amounted to R403.15 million, an increase from last year's R263.8 million.
Card-not-present fraud, which is committed online or through telephonic purchases, increased 77% and is now the second most prevalent form of fraud in SA after counterfeited cards. The banking sector lost R142.8 million this year, up from 2009/10's R80.9 million.
While banks and sites such as EasyPay are clamping down on fraud, reports of consumers who have fallen prey to criminals still abound.
As a result, global credit card firm Visa has certified Stellenbosch-based Entersect's second-factor transaction authentication solution, which allows issuers to authenticate online card purchases.
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Entersect notes that credit cards continue to be the easiest and most convenient way to shop online.
“A passport to international purchases, cards provide a one-click payment solution, allowing funds to move around the globe. This has fuelled and facilitated the e-commerce revolution, and will in all likelihood continue to be the way we pay online for many years to come.”
Entersect CEO Schalk Nolte says the simplicity of e-commerce has allowed fraudsters to cash in on the anonymity of the Internet. “All that is required is access to a few details on the credit card, all available in plain sight, to enable fraudulent online transactions.”
He claims Entersect software prevents both “man-in-the-middle” fraudster attacks on online banking, and stops fraudulent credit card transactions, as the user's mobile phone is used as a second factor to authenticate the transaction.
“Once a card purchase is sent through to the bank, the message containing the transaction details are relayed instantly to the customer's mobile device. The customer can then choose to either accept or reject the purchase. The response is sent back to the issuing bank, and relayed to the merchant using the Visa 3-D Secure infrastructure.”
Nolte adds the software provides a number of fallback solutions based on user connectivity, including SMS transaction authentication, USSD transaction authentication and one-time password generation on the phone. “A key benefit is that users travelling internationally are able to continue banking even when they use an alternate international SIM card.”
He adds Entersect is being integrated into local and international banks' infrastructure.
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