First Data Corp. announced an agreement with HNC Software Inc. to fully integrate HNC’s eFalcon real-time Internet fraud detection service into its suite of e-commerce offerings. This move, which will assist Internet merchants in lowering credit card fraud losses, marks First Data’s latest initiative to provide merchants with the complete set of tools they need to conduct business on the Internet.
First Data is marketing this fraud prevention service, under the name FraudTrap, to its financial institution clients and technology partners, which they can re-brand as a value-added offering to their online merchants. Using neural network and scoring-based technology to indicate the probability that a transaction is fraudulent, this service enables merchants to distinguish in real-time between legitimate and fraudulent online shopping transactions.
Meridien Research Inc. projects the cost of Internet payment fraud to soar to $60 billion by 2005 . Because merchants are responsible for all costs incurred with fraudulent card-not-present transactions, they often mistakenly abandon legitimate sales due to perceived high risk. By teaming with HNC, First Data will help merchants avoid fraud and reduce the need for them to abandon good sales, helping to generate incremental revenue. First Data is leveraging its breadth of e-commerce offerings to help make this fraud solution easily accessible to Internet merchants. First Data is integrating FraudTrap with its SurePayÃ payment gateway, so merchants need only one source for payment processing services, complete with security and fraud tools, as well as for customer service, and receive just one bill and statement for all. Another key product benefit for merchants is First Data’s ability to leverage its overall scale, as the sheer volume of transactions the company processes will help enhance the predictability of the neural network technology.
“We are excited about providing an integrated payment and fraud solution to our clients,” said John Duncan, executive vice president and general manager of Internet Commerce at First Data. “Now our clients can provide an end-to-end, privately branded solution for merchants that will help them complete more sales and reduce costs.” Duncan added that FraudTrap is the first component in what will be a suite of First Data Internet fraud tools, with the ultimate goal of guaranteeing payments.
“We’re gratified that First Data, the world’s largest payment transaction processor, has selected to build on its existing relationship with HNC Software by offering our proven Internet fraud detection solution as part of its end-to-end payment offerings,” said Bruce Hansen, president of HNC Financial Solutions, a division of HNC Software. “Together, our companies will curb Internet fraud losses for online merchants.”
This new service strengthens and complements First Data’s already robust fraud detection capabilities developed through its extensive experience in risk management and transaction processing. First Data provides merchant processing services to more than 2 million brick-and mortar locations and over 95,000 online merchants. In 1999, First Data processed more than 6 billion credit, debit, and stored value card merchant transactions representing nearly $330 billion in sales volume.
The FraudTrap tools are integrated into and enhance First Data’s suite of services designed to provide merchants with everything they need to conduct business on the Internet. Other services include domain name registration, store building and hosting, online merchant account application, payment gateway services, digital certificates, and online marketing/loyalty services.
First Data uses HNC’s FalconÃ solution to help its card-issuing clients detect and prevent credit card fraud. More than 100 of First Data’s issuing clients, which represent approximately 86 million active cardholder accounts, have used this service to successfully avoid tens of millions of dollars in credit card fraud. HNC’s Falcon bank card fraud detection technology was developed over a ten-year period and is currently used to protect more than 300 million payment card accounts worldwide.
About First Data Corp.
Atlanta-based First Data Corp. (NYSE: FDC) is a global leader in electronic commerce and payment services. Serving more than two million merchant locations, more than 1,400 card issuers and millions of consumers, First Data makes it easier, faster and more secure for people and businesses to buy goods and services, using virtually any form of payment: credit, debit, stored-value card or check at the point-of-sale, over the Internet or by money wire. For more information, visit the company’s Web site at www.firstdata.com.
About HNC Software Inc.
Headquartered in San Diego, California, HNC Software Inc. is a leading provider of predictive software solutions for service industries, including financial, insurance, telecommunications and e-commerce. HNC’s suite of predictive software solutions can provide real-time insight into customer relationships based on transaction-level data, helping companies manage their relationships with individual customers. By accurately predicting customer behaviors, these companies can create initiatives to mitigate risk and attrition; improve customer service; develop marketing programs to enhance profitability, and detect fraudulent customer transactions. For more information, visit HNC’s web site at www.hnc.com or contact Melinda Bateman, HNC Software Inc., 5935 Cornerstone Court West, San Diego, CA 92121, (858) 799-3880. For the investor relations hotline, call (800) 396-8052.