Visa Claims Analytics Service Cuts Fuel-Pump Fraud in Half

Visa Inc. on Tuesday reported that gas stations using a service it introduced two years ago to prevent card fraud at fuel pumps has reduced counterfeit fraud by 54%.

Visa says that more than 35,000 U.S. gas stations now use its Visa Transaction Advisor technology at the pump, and that the system is analyzing 76 million transactions each month. On average, VTA users have seen counterfeit fraud rates decline by 54% and lost-and-stolen chargeback rates fall by 51% in the year leading up to September 2015.

VTA is a bridge system intended to reduce gas stations’ fraud losses as they transition from magnetic-stripe card payments to chip card acceptance, according to Visa. The major card networks implemented EMV liability shifts for point-of-sale payments last October, but delayed liability shifts for fuel pumps until October 2017 because of the complexity and cost of upgrading them. A consultant said at a recent industry conference that replacing older pumps with EMV-compliant ones could cost as much as $10,000 per pump. But after next year’s liability shifts, gas-station operators will eat the cost of fraud from fuel pumps that can’t read chip cards.

Visa says VTA uses existing message formats and pump software and hardware. When a cardholder inserts her card, the Visa system analyzes multiple data sets such as past transactions, whether the account has been involved in a data compromise, and nearly 500 other pieces of data to create a risk score within milliseconds, according to a Visa news release.

“Visa Transaction Advisor gives fuel retailers a tool for applying Visa’s real-time fraud insights to transactions at the gas pump,” Mark Nelsen, senior vice president of risk products at Visa, said in the release. “The results we’re seeing in the fuel sector attest to the power of predictive analytics for many of our merchant partners. It’s an effective model for combatting fraud and one we hope to replicate with other merchant categories.”

Criminals sometimes use counterfeit or stolen cards to buy gas at unattended fuel pumps, then resell it for cash. But they frequently abandon the transaction and drive away if the VTA system flags a prospective purchase as risky and the pump prompts the buyer to go inside the convenience store to complete the transaction with an employee, according to Visa.

Visa announced the service in 2014 with 25,000 gas stations as initial users, including those affiliated with oil giants Chevron Corp. and Shell.

Shell now uses it at 15,000 gas stations while Chevron uses it at 8,000. Regional convenience-store chain Sheetz Inc. employs VTA in 500-plus locations in six Mid-Atlantic and nearby states.