First Data Works with Accertify to Democratize Fraud Screening

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(November 16, 2009) First Data Corp. has begun integrating fraud-screening software from an outside vendor that it will offer on a per-transaction basis to its e-commerce merchants. The move brings the software, called Interceptas, within reach of tens of thousands of small online sellers at a time when online fraud is expected to worsen. It also significantly extends the market reach of Interceptas, a product introduced only two years ago by Accertify LLC, a Schaumburg, Ill.-based startup founded by former executives with online travel agent Orbitz LLC (Digital Transactions News, July 18, 2007).

First Data will bring the software live on its payments-gateway platform, which serves about 99,000 mostly small merchants, in the first quarter of next year, says Souheil Badran, senior vice president and division manager for e-commerce at Atlanta-based First Data. The processor’s card-not-present platform, which serves around 50 larger merchants, will follow in the second quarter. For merchants that choose to use the software, pricing will be a nickel up to a quarter per transaction, depending on volume, and will come on top of ordinary processing fees, Badran says.

Interceptas includes tools that allow merchants to screen incoming orders, automate manual reviews, and handle chargebacks. By placing it in the hands, potentially, of tens of thousands of online merchants, First Data hopes to help control fraud losses just as months of poor economic performance have prompted most experts to predict a sharp rise in e-commerce fraud. Online merchants lost $4 billion, or 1.4% of sales, to fraud last year, according to CyberSource Corp. “We can help them keep their fraud rate down,” says Badran.

The deal with First Data is also a breakthrough for Accertify, which up to now has sold its software to almost 40 individual merchants, including Delta Air Lines, Barnes & Noble, and Sony. Accertify has worked with other processors, but the deal with First Data represents the first time its software has been integrated into the processor’s data centers. “We have access to a much larger customer base in a much quicker fashion,” says Michael J. Long, chief marketing officer at Accertify. “We’re hoping to get a good percentage of their customer base [using Interceptas].”

Badran says he plans to expand the data it feeds into the software beyond cards to include e-check negative files from Telecheck, a First Data company. That would allow the platforms to screen and review e-check transactions, as well. The software will also be available on top of a tokenization system First Data contracted for earlier from RSA, Badran says.

In the end, the integration should help small merchants especially, Long says. These merchants typically lack the technology resources larger sellers can deploy to fend off rising fraud. “Smaller merchants are feeling the pain as larger merchants seek protection,” he says.