Visa U.S.A. and the Internet subsidiary of the Better Business Bureau, BBBOnLine, announced a two-year agreement Tuesday to develop joint programs meant to heighten the security and privacy of online transactions.

Citing "a misconception in the marketplace that fraud is rampant online," Carl Pascarella, president and chief executive officer of Visa U.S.A., said the combined brand value of the partnership should bolster consumer confidence in e-commerce. "What we have now is the most trusted name in payments getting together with the most trusted consumer business association," he said.

In a roundtable discussion with American Banker, Ken Hunter, president and CEO of the Council of Better Business Bureaus, reiterated the program's public relations aspect, citing Mr. Pascarella's assertion of a growing misperception about online safety. "Perceptions are reality," he said, "so consumers need to be reassured, even though, as Carl will tell you, levels of fraud are manageable."

Efforts by organizations like Visa and the Better Business Bureau are seen as important for the self-regulatory environment that U.S. businesses want to maintain.

European Union officials have been pushing the U.S. government to seize greater regulatory control of the Internet and online commerce, but U.S. officials have continued to maintain that the industry can and should police itself with minimal government intervention. Visa and BBBOnline say their imprimatur on security and privacy efforts can help show governments here and abroad that merchants, banks, and other companies in online commerce are cooperating to solve problems.

Mr. Pascarella said the partnership is also intended to increase people's awareness that a secure infrastructure exists for online payments. "This is not just about brand," he said. "We could do it ourselves, but I don't think we'd have near the clout without the partnership."

Mr. Hunter of the Better Business Bureau said the affiliation means reaching a wider base of consumers and merchants. Under their agreement, the two associations are to market the same programs to their members. The Better Business Bureau says nearly 24 million customers and businesses use its database every year. "We deal with the ethics, and they deal with the security," Mr. Hunter said of the partnership.

Both executives underscored the alliance's flexibility, calling it "a first step" in the effort to persuade people that the Internet is a safe place to shop. "If we went back 18 months ago and looked at e-commerce, no one would have guessed where it was going," Mr. Pascarella said. "We wanted this partnership to have some flexibility and allow for the channel to grow."

A conviction that e-commerce will gain popularity among consumers underpins the agreement. Both associations said they expect a peak in online shopping volume this holiday season. Visa said 95% of online payments are made on cards and more than half of these on Visa cards. The card association also reported that by 2003 it expects 10% of its overall volume to come from Internet purchases. (However, Web buying already is 8% of the total.)

Visa and the BBB said their partnership will press initiatives to address the concerns of online merchants and consumers, including dispute resolution, safe shopping practices, risk management, and cardholder information security.

Visa and BBBOnline (of which Visa U.S.A. is a founding sponsor) have already begun a joint advertising campaign featuring programs established separately by the two associations. This highlights Visa Secure Commerce, an initiative announced this month to impose data security requirements (such as the adoption of firewalls and encryption technology) on Internet merchants that accept Visa cards. "What we probably didn't focus on early enough was the storage" of data, Mr. Pascarella said.

The program also includes a new payer authentication feature in which a window pops up at the click of the "buy" button, requesting the cardholder to submit a password to the card issuer. If the password matches the one registered with the issuer, the issuer signals authorization to the merchant. Visa is pilot-testing the service and, in a press release, said it hopes to reach the top 100 online merchants during the next year.

The program also includes a voluntary compliance feature in which mock attempts are made to compromise the networks and databases of participating merchants. Visa is working with an Atlanta technology company, Internet Security Systems, on this.

In addition to the Visa program, advertisements promoting the BBB partnership are to feature the BBB Code of Online Business Practices, an ethics guide for Internet merchants that covers such areas as disclosure practices and marketing to children.

The two associations are also issuing shopping tips that encourage people to check merchants' policies regarding data protection and the sharing of personally identifiable information. One online shopping tip also reminds people that federal law limits their liability to $50 when they buy items using their credit cards.

The advice includes these taglines: "Look for signs that the site has been reviewed by trustworthy organizations like BBBOnLine …," and "With Visa, you get the protection of a zero liability guarantee so you're not liable for any financial losses due to fraudulent activity on your Visa credit or debit card."

Also featured in the Visa partnership is the BBBOnline Reliability "trustmark" program, which Mr. Hunter said has so far conferred its seal of approval on 8,800 Web sites, certifying "the merchant's commitment to good customer practices and to stand[ing] behind their advertising claims." Currently, 145 local bureaus in the United States and Canada contribute to the BBBOnline effort, which includes a searchable database of all participating merchants.

Mr. Pascarella said that any effort to polish the Internet's reputation could only improve customers' relationships with their card issuers. "The customer's relationship is with the bank. So what we all want is exactly the same," he said.


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