Built to boost the ISO, MLS channel

PayCertify is helping ISOs and merchant level salespeople (MLSs) make the world a better place for their merchants by reducing chargebacks, lowering interchange fees and shifting liability to issuers, according to Chase Harmer, the company's Chief Executive Officer. The Los Gatos, Calif.-based vendor is accomplishing those formidable tasks by providing a painless way to tie consumers to their card-not-present (CNP) purchases, he said.

Indelibly connecting card users to their transactions fights first-party fraud by eliminating the opportunity for consumers to deny they made the purchase, Harmer noted. When cardholders can no longer worm their way out of their obligations, the number of chargebacks declines to almost zero, he added. To capitalize on that reduction in chargebacks, PayCertify is integrated with Verified by Visa and Mastercard SecureCode. Those integrations verify who's making the purchase and thus enable the card brands and issuers to commit to an electronic 3D Secure "handshake." When that handshake occurs, the card brand reduces interchange fees for the merchant and shifts liability for the transaction from the merchant to the issuer.

What's more, merchants give up nothing to gain those victories. That's because PayCertify banishes the friction that has prevented retailers from using other methods of connecting customers to purchases, Harmer stated. Those other approaches, including projects by Visa, Mastercard and American Express Co., ask consumers to identify themselves by providing additional information, like the last four digits of a bank account number. Consumers often balked at those requests and simply abandoned their online shopping carts, Harmer said. That caused merchants to reject the verification process to avoid friction for consumers.

Easing the friction of verification

PayCertify discovered how to avoid friction in fraud prevention when it was developing a way for hotels to combat the problem of "no shows" – people who book a room, don't show up and then refuse to pay. The no-show problem is compounded by the fact that travelers often reserve accommodations through third-party travel sites. Those booking engines then "own" the relationship; the hotel doesn't exchange information directly with the consumer. If the consumer refuses to pay, the hotel has trouble pursuing justice because it doesn't have documented electronic correspondence with the consumer. But PayCertify ties the third-party booking information to the hotel's IT system as soon as it's received.

PayCertify then creates a validation link and sends it via text message or email to the consumer, Harmer said. The consumer clicks to confirm the booking, and PayCertify creates a token to document the transaction and bring about the handshake between the card brand and the issuer. The process also works with other purchases.

Most issuers onboard

Not all issuers are using the latest version of 3D Secure, so the handshake occurs in about 80 percent of transactions made through PayCertify, Harmer stated. In addition, some transactions don't qualify for the liability shift because the purchase is deemed unusual, he added. PayCertify's fraud protection can operate with the company's own processing and gateway services or with services from other vendors, Harmer noted. However, obtaining everything from PayCertify heads off integration challenges, he suggested.

Fraud prevention at PayCertify doesn't end with 3D Secure, Harmer said. For instance, the company partners with Kount Inc., a vendor that combats criminals who use proxy servers to hide their location when making fraudulent purchases with a card from another geographic area. PayCertify also developed proprietary social scoring, which rates consumers based on their online followers, friends, and postings on social networks such as Twitter and Facebook. In addition, the company offers fraud insurance.

Most of PayCertify's business originates with ISOs and MLSs, who earn residuals from selling the technology and also benefit because PayCertify services build customer loyalty that curbs merchant attrition, Harmer noted. "We are built for the ISO and agent channel," he said.

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