Visa International has made an equity investment in CyberSource Corp, the ecommerce and fraud screening company that began life as the IT department of Beyond.com (CI No 3,513). Visa, the for-profit association of Visa card issuers, has its own sophisticated screening techniques for the non-digital world, but San Jose, California-based CyberSource has always had to deal with the special problems of fraud detection in internet commerce. For example, in many cases, internet order fulfillment takes the form of a software download, meaning that the merchant has no physical delivery address and making it harder to track down thieves. CyberSource responded by building fairly subtle controls into its fraud screening system. The software gives transactions a score based on a number of factors that may or may not indicate fraud. The higher the score, the higher the risk. Each merchant can then choose the level of risk to which it is prepared to be exposed. The CyberSource system has already attracted favorable attention from fraud-plagued web businesses like Playboy.com. Now Visa has taken what it describes as a significant stake. The deal is a particularly good one for CyberSource, which gets not only the money but also access to Visa’s data and expertise. With that data, the company hopes it can keep improving its fraud screen.
