Online credit-card fraud will be more difficult to do if new authentication software developed by Arcot Systems for a Visa USA service is as good as its developers claim.
Arcot and Visa USA officially announced on May 14 that Arcot's TransFort product is being deployed by banks and merchants to provide real-time authentication of credit cards over the Internet.
TransFort supports passwords, smart-card chips, and Arcot's own identification technology. It can handle PCs, mobile phones, personal digital assistants or set-top boxes, and complies with Visa's 3D-Secure program for providing secure transactions over the Internet.
Arcot has been deployed in major U.S. banks and by merchants since June, said Mike Houlahan, Arcot's vice president of marketing.
Visa USA is using Arcot's technology to provide authentication services, said Jim McCarthy, senior vice president at e-Visa USA, a division of Visa USA. Banks could also use an access controller from Arcot and do the authentication in-house, or they could contract with a third party for the service, he added.
Arcot helped develop the specifications for 3D-Secure and is the first vendor to come out with a product that meets the specification of 3D-Secure, which Visa announced last year as the successor to Secure Electronic Transaction technology, McCarthy said. Visa owns the code, which is open and can be used by other hardware and software suppliers of security and transaction processing systems, he said.
"I don't want to limit banks or merchants to one choice," he said.
Visa has commitments from banks that issue more than 50 percent of its cards that they will support 3D-Secure, and it will announce in June additional rules for implementing the service, including steps to protect merchants against repudiation of purchases, McCarthy said. Banks are expected to market the program to their customers.
The system requires merchants to download a simple software plug-in that will recognize the authentication scheme. Cardholders sign up for the new service in the same manner as if they were activating a typical credit card, by calling an 800 number and entering a personal identification number. When making an online purchase, the cardholder sees a button on a screen and enters his PIN to have the transaction authenticated.
Houlahan said that the whole system uses methods familiar to cardholders, requires no changes in merchant infrastructure, is inexpensive to implement and plugs into the existing Visa payment system.
McCarthy said that 3D-Secure will also be used on Visa smart cards issued by First USA, FleetBoston Financial and Providian Financial.
In another announcement, Visa said that it is working with leading suppliers of point of sale terminals and card processors to make it easier to use smart cards. That includes availability of point-of-sale terminals that comply with Europay International, MasterCard International, Visa (EMV) interoperability standards for accepting smart cards. Also processors who support 80 percent of Visa USA's cards can recognize smart card as well as magnetic stripe cards certified to be interoperable.
Liz Farnsworth, Visa USA's department head for smart-card applications, said that the terminal software applications for smart cards would be available by the end of the year.