Press Releases
Visa USA Announces Plan to Speed Fraud Recovery for Financial Institutions
San Francisco, July 20, 2006
Visa USA is helping financial institutions recoup their fraud losses caused by the improper storage of magnetic-stripe data. Visa's enhanced recovery process will provide faster reimbursements for issuers, while also helping acquirers and merchants better forecast their potential fraud liability.
"Our goal is to prevent fraud. But when it does happen we want to be able to help issuers and acquirers recover as quickly and efficiently as possible from its impact," said Jean Bruesewitz, Senior Vice President, Processing and Emerging Products, Visa USA.
Visa security requirements prohibit the storage of payment card magnetic-stripe track data after the transaction authorization. Merchants who fail to comply with these regulations and become the victim of a data compromise increase issuers' counterfeit fraud losses and operational costs. To ensure a fair balancing of these costs, effective October 1, 2006, Visa will be implementing an improved process called Account Data Compromise Recovery (ADCR).
Under this enhanced process, issuer compensation will be automatically calculated and reimbursed based on the counterfeit fraud the financial institution reports to Visa. Typically, issuers will receive financial recovery within six months from the date Visa sends an alert notifying them of the account numbers at risk.
Bruesewitz noted, "This new process represents a significant improvement over the current recovery process which requires extensive support documentation leading to compensation that could have taken up to 32 months."
Additionally, issuers will be eligible to receive $1 per account as reimbursement for operational costs incurred for qualifying data compromise events. The total number of qualified accounts would be reduced by 20 percent to approximate the number of accounts that are already closed or expired, those accounts generally not requiring any additional action by the issuer.
In addition to helping issuers more easily receive reimbursement, the enhanced procedures also seek to set fair limits on acquirer and merchant liability by establishing a maximum timeline of up to 13 months of liability for eligible counterfeit transactions properly reported. This is a significant change from the current process, which allows issuers to pursue financial recovery up to the last expiration date of the impacted accounts. Visa will provide the acquirer an estimation of liability early in the process to better forecast financial impact. Additionally, acquirers can submit a written appeal for consideration by Visa prior to any final assessment of financial liability.
Today, Visa issuers absorb more than 70 percent of payment card fraud losses incurred, with acquirers and merchants shouldering the balance. Visa's zero liability policy ensures that consumer cardholders are not responsible for fraudulent purchases.
"Growth in card payments will continue to require the balancing of fraud losses and operational costs among issuers, acquirers and merchants," said Bruesewitz. "The improved ADCR process now makes that balancing act more equitable and efficient for issuers and acquirers."
About Visa
Visa USA is the nation's leading payment brand and largest payment system, enabling banks to provide their consumers and business customers with a wide variety of payment alternatives tailored to meet their evolving needs. Visa USA is committed to increasing the choice, convenience, acceptance and security of Visa payments for all stakeholders in the payment system - members, cardholders and merchants. Through its 13,432 member financial institutions, more than 510 million Visa-branded cards have been issued to cardholders in the United States. Last year, U.S.-based financial institutions relied on Visa's processing system, VisaNet, to facilitate $1.6 trillion in transactions with unparalleled reliability.
Worldwide, cardholders in more than 150 countries carry more than 1 billion Visa-branded cards, accounting for more than $3 trillion in annual transaction volume.
Visa offers a trusted, reliable and convenient way to access and mobilize financial resources - anytime, anywhere, anyway.
CONTACTS
Jay Hopkins
For Visa
(703) 683-5004 ext. 107
jhopkins@crc4pr.com
Rosetta Jones
Visa USA
704-444-3815
rjones@visa.com