VeriSign's Q3 Processing Totals Skyrocket vs. 2002

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A meteoric rise in e-commerce transactions for VeriSign clients was revealed in today's release of merchant data by the payment and anti-fraud services firm.

VeriSign processes about 30 percent of all online merchant-customer transactions in North America. And for January through October this year its 97,000 online retailers reported sales of $19.8 billion, up from $9.7 billion in the same period last year.

Moreover, VeriSign handled transaction volumes of $6.9 billion for the third quarter, up from $3.7 billion for that quarter last year and $5.8 billion in second-quarter 2003. Also, merchant sales volumes for September and October combined rose from $2.56 billion in 2002 to $4.73 billion this year.

A majority of online purchases through VeriSign's payment network were made from 7 a.m. to 3 p.m. Mondays through Fridays. Mondays and Fridays were the busiest days for online shopping at VeriSign's retail customers, while Saturdays and Sundays were the slowest.

Mondays likely are busy because people shop at retail stores on weekends and make an online purchase on their return to work. Also, the Internet connection at work, often T1 or broadband lines, is faster than at home. Parents fulfilling requests over the weekend from children is another possibility.

"Are we seeing a displacement between the physical world and the online retail world?" said Trevor Healy, vice president of VeriSign Payment Services, Mountain View, CA.

December and November are the busiest months for VeriSign's payment network. Last year's total for that period was $2.96 billion, and it is expected to double this year.

June, July and August are laggards for online shopping. Even for those months, online spending through VeriSign's retailers jumped 87 percent this year to $6.3 billion from $3.4 billion in 2002.

But this rise in online retail can have drawbacks. E-commerce fraud totaled $953 million last year, according to Gartner Inc. research. This accounts for roughly 2 percent of e-commerce sales based on several tallies for 2002. The offline rate for fraud is about 0.7 percent and rarely exceeds 1 percent.

Online fraud takes the form of stolen products, cash siphoning from site takeovers and identity theft. All three are growing.

Aware of this, VeriSign in June inaugurated its Fraud Protection Services product. It is based on rules, patterns across its network and average number of times a card is used online. The company claims 1,500 merchants in its payment network have signed up for fraud protection.

VeriSign claims several advantages for its anti-fraud service. One, it reduces the cost of bad debt for duped online retailers. Two, it has more breadth than an in-house fraud-identifying device.

Put simply, an online retailer's fraud system is only as good as the sample data it sees, or what the Web site experiences. VeriSign claims its service has an early warning element.

"If we see a fraudulent event occurring at a merchant site, we'll take that intelligence and apply it to a broader VeriSign customer community," Healy said. "What that gives the merchant customer is a network effect."


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