MasterCard International said it is launching a fraud control system that provides on-line identification of potentially high-risk merchants.
The New York-based association's Problem Merchant Identification System, or Promis, will maintain a data base of merchants that have been dismissed by their transaction-acquiring banks for "risk-related reasons."
This designation will include a wide range of counterfeit activity, ranging from the processing of stolen credit cards to the generating of false transactions.
Promis can resolve questions about a card-accepting company's status before the merchant bank enters into a contract, MasterCard said. The association expects to implement the system sometime this summer.
MasterCard is touting the new system as a replacement for its Combined Terminated Merchant File, a joint venture of MasterCard and Visa that will cease processing in August.
MasterCard said Visa wanted out of the program because MasterCard owned the CTMF terminal data base, resulting in many Visa members' processing their requests through MasterCard.
Visa, in contrast, said it will be discontinuing the delivery aspect of the CTMF program, but will retain the processing activity. This month, the San Francisco-based association has implemented the Merchant Performance Reporting System, which it says will "augment" its risk management coverage.
A spokesman said Visa "will be more involved than ever" in this area.
The Visa system offers comparative industry information, such as how merchants are performing in relation to others in their field.
Joel Lisker, senior vice president for security and risk management, said MasterCard regarded the impending move from CTMF "as an opportunity to make the merchant identification system even more useful for our members."
MasterCard described the new system as a "vital tool" for banks needing to quickly process new-merchant inquiries and regulate their existing merchant portfolios. A spokeswoman labeled the on-line identification aspect its primary benefit "because this promises many more functions" than those currently offered.
These new functions will include the ability to ascertain the reason for a merchant's termination from a card-acquiring arrangement. Additionally, acquirers will have the option of limiting their merchant searches to specific countries and regions.
MasterCard said Promis is a significant improvement over CTMF in that it provides a direct connection for merchants.
