Visa rolls out chip cards across biggest Latin American markets to cut fraud

- Friday, September 9, 2011

Visa rolls out chip cards across biggest Latin American markets to cut fraud

Retail payments processor Visa (NYSE: V) is rolling out chip card systems across Brazil and Mexico to help cut down fraud in the countries, its biggest Latin American markets, systems risk executive for the region Marco Bravo told BNamericas.

Prevention system investments have allowed Visa to reduce fraud losses for its client banks by some 72% in the past decade, despite the rise in card-related crime.

Fraudulent transactions inside the world's biggest card payments system have fallen from 18 cents per US$100 in the early 2000s to five cents currently, Bravo said.

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Although Visa does not issue or manage the cards that bear its name, investments in risk prevention are strategic for the company, the executive said.

"When there's a fraud loss, it's an issuing bank's bottom line that's affected - not Visa's. However, for us prevention is crucial," Bravo noted. "We have to protect our brand and the trust of our partner [banks]."

"If a person was hit by fraud, chances are he or she will stop using that card or will reduce the use. Therefore, we do have a vested interest in terms of prevention."

CHIP ON THE SHOULDER

The chip cards are part of a growing trend of so-called "dynamic" card security measures. These are security codes that change with every transaction, cutting down fraud losses to a single purchase.

Another recent prevention investment by Visa has been the grading system, which rates every transaction according to risk level, allowing banks to decide whether to authorize it or not.

"Today when we talk about fraud, we talk about criminal organizations that are global in nature," Bravo said. We have global visibility as the biggest [payments] company, and every single Visa transaction shows up in our system."

Visa processed US$3.5tn through 74bn transactions around the world in the 12 months to June.