Visa USA is introducing new fraud detection technology designed to prevent an estimated $164 million in losses at the merchant check-out over the next five years.
The patent-pending Advanced Authorization system uses neural networks to provide card issuers with risk ratings for individual transactions at the merchant point-of-sale. The issuer is then able to send an immediate response back to the merchant whether to accept or decline the transaction.
Visa USA is introducing the system across its network today, after pilot tests with a number of US issuing banks confirmed the software's effectiveness in thwarting fraud.
"Advanced Authorization gives us an accurate risk score for every transaction, which has successfully helped us refer more fraudulent transactions and approve transactions that otherwise may have been referred or declined," says Steve O'Connell, risk manager, Merrill Lynch. "In addition, Advanced Authorization has created operational efficiencies for our team because our fraud analysts do not have to investigate every case and can concentrate their efforts on the riskier transactions which are more likely to be fraudulent."