ARLINGTON, Va. – VISA USA, the giant card association based in San Francisco, has partnered with credit unions that issue its branded debit and credit cards in a significant new effort to educate cardholders about its online security program. By May 12 credit union card issuers participating in the Verified By Visa program will have to put links, either banners or buttons, to the Verified by Visa page on the Web on their own home pages. They will also have to include a statement about the program, written by VISA, in their statements and alert their staffs about VISA's toll-free telephone number for cardholder problems with the program. By May 15, credit unions will have to order statement inserts, which VISA will write and print, to include with their statements. VISA also urged them to carry statements about the program in e-mail to members or their newsletters. Credit unions will have to take similar steps in June and July, and also make sure their logo is on the Web pages that pop on the merchants' sites to authenticate their cardholders. "VISA and credit unions have the same goal," said Jim McCarthy, senior vice president for product deployment for VISA, "to make sure as many cardholders as possible have as safe and easy an online shopping experience as possible. These measures will help make sure that happens." VISA decided to mandate the new educational efforts after a number of credit union cardholders had tried to authenticate their identities through Verified by VISA at participating merchants and wound up either moving to another payment method or abandoning the shopping process altogether, McCarthy explained. Part of the problems were technical and arose from difficulties making sure processors, merchants and financial institutions were all able to communicate the necessary information efficiently, McCarthy said. But the card association determined another part of the problem was that not enough card holders, particularly credit union cardholders, had been educated sufficiently about the program and how to use it – despite a widespread mass media advertising campaign highlighting popular football star Emmitt Smith. "We were pleased with the Smith campaign," McCarthy said, "but that was trying to communicate some pretty esoteric ideas and to get cardholders to sign up for the program on their own." It was not as much as "hands-on" campaign, he explained. Credit Unions Are Different The need for the additional education arose from the particular needs and responsibilities of credit union card issuers according to McCarthy and other executives. Essentially, because of a relatively high rate of credit and debit card purchases among credit union cardholders which made them vulnerable to fraud and because of insurance requirements, credit unions found themselves with an educational burden with Verified by Visa that other financial institutions might not share, McCarthy said. In Verified by VISA, the card association has tried to duplicate online the same authentication environment cardholders and issuers face when they make purchases offline, McCarthy explained. In an offline purchase a cardholder signs the receipt to authenticate his identity for the purchase and there are procedures in place with the processor or financial institution to further guard against fraud. Since signatures are not possible online, the card association came up with the Verified by Visa program to try to make sure that cardholder identity was authenticated. The processor and financial institutions' guards against fraud offline are also in place to guard against online fraud as well, he said. The problem arose when VISA announced that, after April 5, if a cardholder came to a Verified by Visa participating merchant and failed to authenticate their identity before making a purchase, the merchant could not be held responsible for the potential fraud. That left the credit union card issuer holding the bag for the loss and the only way to guarantee the highest level of protection would be for insured credit unions to participate in the program as card issuers and to make sure that as many of their cardholders as possible authenticated their identity through the program before completing an online purchase. That brought CUNA Mutual into the picture. CUNA Mutual required that credit unions sign up for Verified by Visa as a condition of their continuing to carry online plastic card coverage of their insurance bond. Insured credit union card issuers that did not participate would still be covered against other kinds of loss, but would not be covered for the potential online fraud losses. Further, to guarantee that credit unions received the highest level of protection possible, CUNA Mutual insisted that credit unions participating in the program use what is called Activation During Shopping. In ADS, sometimes called auto-enrollment, if a cardholder cannot complete the authentication process the purchase cannot go forward with that card and, initially, that meant that a significant number of credit union cardholders were abandoning their online purchases and, sometimes, blaming the merchants for their experiences. If credit unions had opted instead for an approach that merely asked credit union cardholders to use Verified by Visa for the first few transactions, but didn't require it to complete the purchase, a special educational effort would not have been as pressing, McCarthy said. For its part, CUNA Mutual countered that it felt it had to insist on credit unions using ADS because VISA had not relented on its April 5 deadline and credit unions are still vulnerable to fraud losses. "We wanted to make sure as many credit unions as possible were protected in these online transactions," said Al Stendahl, vice president for product support for the insurance firm. But McCarthy pointed out that the other fraud protections were still in place for online transactions and that the charge back procedures under Verified by Visa were the same for both offline and online transactions. In the end, both sides emphasized that using ADS with the increased educational effort was the best course, particularly for credit unions. McCarthy asserted that credit unions, with a relatively large percentage of debit cardholders, had a particularly strong interest in making the online environment as safe and easy as possible for cardholders. He noted the rise of alternative online payment methods like Bill Me Later, which offers online customers who qualify with what is essentially an instant small loan for their purchase that they can pay later. "We know that debit cardholders are among the most reluctant to shop online with a credit card," McCarthy said, "it's important we make online purchases safer and easier as soon as possible." [email protected]