Visa Hosts Industry Leaders at First Security Summit

At a first-of-its-kind summit, entitled “Cardholder Security in the New Electronic Payments Age,” Visa USA President and CEO John Philip Coghlan addressed leaders from the banking, retail, government, law enforcement and high-tech communities and underscored what is really at stake in the battle over card security.

“Trust is crucial to the success of economic systems,” explained Coghlan. “I believe that the security of our clients’ data is one of the most important pillars of that trust.”

Looking out on the current security environment, Coghlan declared that the time for cross-industry collaboration on issues of cardholder security has arrived.

“We are all reliant on each other,” said Coghlan. “The threats to our customers’ trust in us will not lessen. Without remorse, and without rest, criminals will seek to undermine our electronic payments system. Together, we will defend against those attacks.”

Addressing how best to ensure continued consumer confidence, a wide range of experts at the summit explored a number of related areas, including best practices for safeguarding customer information, dissecting a data compromise event, and how best to combat identity theft and assist its victims.

“Together, we actually have the intent, the capabilities, and the resources to harden our environment even further and secure the trust of consumers and businesses,” declared Coghlan, who highlighted examples of how Visa is answering the challenge. Through significant investments in technology, the incidence of Visa-system fraud has fallen to just 6 cents per $100 transacted, even as the volume of Visa card transactions has grown. “I have also directed an increase in our spending in anti-fraud measures by at least $200 million over the next four years.”

To conclude his remarks, Coghlan outlined some specific areas where he believes the payments industry can best work together to enhance security. Specifically, he called for:

• A national, uniform data protection standard for every entity that retains sensitive personal information.

• A national standard for consumer disclosure of security breaches in place of multiple state laws.

• Tougher penalties for criminals responsible for card and data fraud.

• International collaboration to ensure that data thieves are brought to justice. Specifically, Visa supports an international treaty that bans trafficking in stolen card data and legislation that would give the FTC greater ability to cooperate with law enforcement agencies worldwide to fight cross-border fraud.

Visa Fraud Report
Providing new insight into the current state of card fraud, Visa released a new fraud report detailing recent successes and challenges on the horizon. According to the report:

• Visa’s fraud rate has decreased by 7 percent per year from 1990 to 2004, even as Visa’s volume has increased 16 percent annually.

• Visa’s continual monitoring systems flag roughly 250,000 transactions every day for possible fraud, providing instantaneous alerts to card issuers so they can take action.

• Visa has been involved in over 80 separate fraud investigations during 2005.

• Merchants saved $12.6 million in 2004 as a result of the fraud protections provided by Verified by Visa. Verified by Visa is a service that authenticates cardholders for Internet purchases.

• Visa has realized a 54.3 percent drop in chargebacks over the last 5 years (or a savings of $1.5 billion to merchants), due to programs such as RED (Re-Engineering Disputes), a transformation of the dispute resolution process using advanced technology that makes the process faster, simpler, and more cost-effective for all parties.

New Consumer Fraud Survey
Visa also released a new consumer fraud survey conducted by Javelin Strategy & Research, which found the following:

• Consumers believe they have a responsibility for protecting themselves against fraud and that they share that responsibility with payment card companies, banks and credit unions, credit reporting agencies, merchants, law enforcement, the government, and themselves.

• Specifically, consumers ranked payment card companies such as Visa (69.9 percent), card issuers (69.7 percent), their bank or credit union (70.1 percent), and “myself” (71.1 percent) as those “most responsible” for protecting them against payments fraud.

• Consumers see banks and payments companies as doing the most to solve payments fraud, ahead of merchants, credit reporting agencies, and other entities.
  • Banks (73 percent)
  • Card associations (70 percent)
  • Card issuers (68 percent)
  • Consumer groups (64 percent)
  • Credit agencies (62 percent)
  • Law enforcement (61 percent)
  • Merchants (59 percent)
• When asked, more consumers said they would respond to security concerns by shredding documents (19 percent) than by decreasing their usage of debit (4 percent) or credit cards (13 percent).