The company thinks it can leverage data gathered from the volume of transactions it already helps process, along with data from its domain name lookup services, to differentiate the services.

VeriSign CEO Stratton Sclavos said the system was developed in response to VeriSign’s own problems with fraud. The company bought competing scoring services but found them unsuitable to an online business, he said.

Sclavos said: The problem we found with internet fraud was almost the reverse of retail fraud – in retail fraud you have a single card played across many merchants, but on the internet you can have, programmatically, thousands of cards played on a single merchant.

Sclavos said that a few years ago 20% of VeriSign’s online transactions were subsequently found to be fraudulent, and that now stands at 0.45%. Online businesses are losing seven cents on the dollar to fraud, he said.

Companies selling digital goods that do not require a shipping address, such as VeriSign’s domain names, are particularly badly hit by. Credit card charge-back penalties are the bane of the domain name industry’s existence. Ask Register.com.

VeriSign’s service will be able to use charge-back histories drawn from processing transactions for 89,000 merchants to help score fraud risk. The company claims to process 25% of the US’s online purchases each year.

It also will use techniques including figuring out the rough geographical location of the buyer from her IP address and seeing if it matches the address on the credit card. It also will work with authentication programs from Mastercard and Visa.

Sclavos said the company will also use aggregate information gathered from its payment and domain name resolution services to identify fraud trends that it can then use in scoring the risk of transactions being fraudulent.

Frankly, I don’t think anyone else has that kind of visibility into what’s happening on the internet as VeriSign does, he said.

Two levels of service are available, one for US-only merchants, and one for those with buyers beyond the long arm of US law. The former costs $19.95 per month and $0.05 per transaction, the latter costs $49.95 and $0.10 per transaction.

Source: Computerwire