Gas stations are a hot spot for card fraud. Mark Nelsen, Visa’s SVP of Risk Products, shares new data on how Visa Transaction Advisor has helped 37K station operators cut fraud and chargeback rates by more than half.
Gas stations offer a lot of benefits for card fraudsters.
They’re unattended, which makes it easy (and even inconspicuous) for them to check out whether their counterfeit cards are alive and well and ready to use.
Recognizing that problem for station owner/operators, in 2014, Visa introduced the Visa Transaction Advisor (VTA) to help these retailers fight back, especially given the anticipated lag in equipping fuel pumps with EMV readers. A pilot program then with Chevron leveraged VTA’s “intelligent analytics” in order to identify higher-risk transactions that may also be fraudulent. As a result of that pilot, there was a 23 percent reduction in fraud.
Today, Visa announces new data as a result of the expansion of VTA to more than 35,000 gas stations across the U.S. Visa’s SVP of Risk Products and Business Intelligence Mark Nelsen tells Karen Webster that station operators have seen fraud decline by more than half. On average, they’ve experienced a 54 percent drop in counterfeit fraud rates and a 51 percent decline in lost and stolen fraud chargeback rates.
Nelsen describes VTA as “a solution that works,” noting that the real-time fraud insights related to transactions at the gas pump have continued to improve since the initial pilot launch back in 2014. Refining the fraud risk model and creating multiple different iterations over the last two years has helped dramatically curb fraud in an environment fraudsters are sure to target.
When we asked whether the reduction in fraud was related to an overall reduction in fraud or the use of better tools to nip it in the bud, Nelsen said both. “We’ve seen a big reduction overall in fraud at the gas stations as a result of [VTA]. Not only has it gone down as an aggregate, but there's been a reduction in the fraud rate as well," Nelsen added.
VTA is now deployed at more than 35,000 gas stations, which Nelsen attributes to its ease of deployment. There is no incremental software development required to “turn VTA on.” The work is done at the acquirer level with Visa.
“All the merchant has to do is tell Visa what their risk tolerance is and then we adapt the model to meet their threshold,” he confirmed.
Once the threshold is set and a cardholder inserts her card at the pump, Visa analyzes multiple data sets to create a risk score within milliseconds, allowing the station operator to instantly identify any transactions with a higher risk of fraud. When those high-risk transactions come up, Nelsen said a “Go See The Attendant” response is sent down to the pump and the merchant can then perform further cardholder authentication before gas is pumped, or simply scare the bad guy away.
With the service already analyzing well over 76 million transactions each month, it’s safe to assume other use cases and applications for the VTA solution are on the horizon for Visa.
Nelsen acknowledged that other unattended environments such as kiosks and eCommerce are on the table.
“We've always been able to deliver risk intelligence down to the issuers, but we could use this same approach on the eCommerce side where we can as easily identify high-risk transactions for merchants,” Nelsen said.
As Nelsen pointed out, it’s never easy to deploy any solution quickly and have it scale, but VTA’s results so far seem to offer a solution to snub out fraud in an environment where it has the tendency to flourish.
“No one wants criminals coming to their gas stations in general so it’s great that VTA has helped station operators eliminate that element. It not only reduces fraud, but creates a better customer environment," he added.