Mail order and telephone order (MOTO) and other cand-not-present transaction inherently have higher fraud than face-to-face transactions. Acquirers can now help these merchants reduce their exposure to this fraud by utilizing the CVV2 program.
What is CVV2/TAV?
The CVV2 program is designed to reduce fraud in the card-not-present environment by validating that a genuine Visa card is being used during a transaction. The CVV2 is a three-digit security code that is printed on the back of many Visa cards. All Visa cards must have this feature by January 1, 2001.
How does CVV2 work?
When merchants ask customers for their account numbers and include the CVV2 information in the authorization messages, Issuers can validate the CVV2 codes and send the match/no-match results in their authorization responses. Merchants, by using the CVV2 results along with the Address Verification Service (AVS) and authorization responses, can then make more informed decisions about whether to process the transactions. In addition, by using CVV2, merchants can expect to reduce their chargebacks by as much as 26 percent.
Currently, Issuers can pass fraudulent mail/phone order or electronic commerce transactions back to the Acquirer under chargeback Reason Code 61, "Fraudulent Mail/Pone Order Transaction" To ensure the success of the CVV2 program as a fraud deterrent, the U.S. Board of Directors recently approved changes to the Operating Regulations that limit an Issuer's right to use this chargeback if CVV2 is included in the authorization request, but the Issuer is not participating in the CVV2 program. This limitation became effective on November 1, 1999.
Although CVV2 participation is optional, Acquirers' processing centers must pass technical certification, which ensures their ability to support new fields in the authorization request/response messages. Acquirers are not required to certify for the CVV2-participating Acquirer processors should ensure that merchant can correctly send and receive the new CVV2 fields after making host/terminal changes.
The September 1998 VisaNet Business Enhancements Technical Letter, Update Bulletin #1 dated June 18, 1998, provides Acquirers and their processors with more detailed information about changes to the authorization message. For a detailed implementation schedule, and questions and answer about the CVV2 program, Acquirers can refer to the article "Visa Announces Card Verification Value 2 Card-not-present Implementation Dates," which appeared in the July 1998 VisaNet Processor Digest. Additionally, a Member Implementation Guide and Certification Guide are included in the August 1998 VisaNet Processor Digest. Acquirers with questions about the CVV2 program should contact their Visa account executive. |
