After implementing a new hardware safety communication service designed specifically for the direct marketing industry, online software retailer eWarehouse, Portland, OR, reduced the percentage of fraudulent sales it was experiencing from 60 percent to 1 percent.
“We were on the verge of deciding whether or not to shut down our software business,” said Mike Di Domenico, president of eWarehouse. “But with the combination of our own in-house fraud technology and the SecureTrans service, we have been able to cut that back dramatically.”
SecureTrans was developed by electronic payment processor Paymentech, Dallas, in October. Paymentech officials describe the service as a hardware-based solution to using the Internet for credit card and other forms of electronic payments.
It provides direct marketers and other merchants connected to the Internet with an option to using the traditional methods of telecommunications such as dial up or leased phone lines.
“The device is a little black box placed between the computer’s firewall and router,” said John Shirey, senior director for electronic commerce at Paymentech. “We provide the merchants with their own black box, which is easy to install, and it establishes a tunneling session and an encryption system for them.”
The service uses a system that encrypts the data being sent to Paymentech three different times.
eWarehouse, which sells nearly 10,000 software programs a month, is one of six companies currently using the service. Shirey said SecureTrans is “plug-and-play” hardware.
“Merchants just have to plug it into their systems and they can have a telecommunication connection with us in a matter of minutes,” he said.
Di Domenico agreed: “It was one of the smoothest transitions we have taken part in.”
According to Di Domenico, the speed in which SecureTrans is able to process their authorizations is vital to eWarehouse.
“People buy software from us, and we download it to their computer in real time,” he said. “We don’t have the three or four days that someone selling books does to check out the credit authorization. We need to clear that transaction within seconds. For us, the process has to be real time and online. This new does that for us.”
Di Domenico said SecureTrans has provided his company with a complete back-end solution to the real-time credit card authorization problem they were experiencing.
“It allows us to securely pass all of the credit card information to them,” he said. “They will either validate that information or not, instantly letting us know in real time if the credit card number and addresses are good and if there is enough balance on the card to pay for the software.”
Larry Bouchard, group manager of product management for Paymentech, said the start-up cost of SecureTrans is equal to the cost of leasing phone lines for two months.
“Our goal is to help people reduce their expenses and increase their revenue,” Bouchard said. “We made a hardware device as opposed to a software device so that direct marketers could concentrate on what their area of expertise is and not have to worry about putting new software into a system that may not be entirely new.”
Bouchard said SecureTrans also can cater to the needs of direct marketers by allowing them to send their transactions in the traditional “batch delivery” manner.
“Direct marketers will tend to be going at two speeds: full speed or stopped,” he said. “By using this when they want to process their transactions, they won’t have to wait as if they were dialing up a phone line. It raises the speed and reliability of delivering and transmitting data.”