Visa International has upgraded its fraud reduction system, saying the features it added could save $25 million in fraud losses for one year.

Risk Identification Service, which is designed to cut merchant fraud, has been "redesigned, updated, and made a lot more convenient for users to get information from," said Allan Trosclair, vice president of fraud control for Visa U.S.A.

RIS, Visa's central tool for fraud control since 1984, was fragmented and used manual reporting for some features. "Now it's updated automatically, as members report fraud," said Mr. Trosclair.

RIS now integrates several programs on the same platform, Visa said, making it easier to read reports on a more timely basis. Instead of reports' being produced twice monthly, they can be issued whenever risky behavior is detected.

Among merchant behaviors monitored are excessive chargebacks, requests for original sales drafts, and large numbers of credits to accounts.

The reports enable members to react quickly to suspect or fraudulent activity, with a recommended course of action.

Merchant Performance Reporting, a service available by subscription, augments the Combined Terminated Merchant File, a joint program with MasterCard. Visa said it gives more in-depth information about a merchant's history, which can help merchant banks evaluate prospective merchants.

Member financial institutions can use the reports to satisfy the regulatory requirement to monitor merchant performance, said Brian Thesing, vice president of service development, Visa International.

Fraud savings will come from the reduced time it takes to identify high- risk behaviors that lead to fraud. Member banks will be able to call on merchants, educating sales people or terminating a relationship if necessary.

Visa's fraud losses declined 3.3% worldwide in 1994, to $646 million, and counterfeit losses fell 6.1% last year, to $146 million.

Visa is testing additional features for its RIS program.

The Merchant Risk Identification Service will use neural network technology to monitor merchant behavior, just as it now monitors cardholder purchase patterns. A pilot of that program will begin next fall.

Deposit monitoring will track merchant deposit patterns.

"It's these kind of services that have been helping us drive down fraud," said Mr. Trosclair. "With new systems coming on line, we anticipate continued decline."

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