Now that businesses operate in a global marketplace, credit card fraud is no longer restricted by geography – making it harder than ever for online shop owners to protect themselves from deceit. In response, AuthoPay has set themselves to become the first “universal” credit card fraud protection service – allowing merchants to save time, money and lost stock.
According to Australian Payments Clearing Association (APCA), the number of fraudulent transactions rose from over 800,000 to 1.65 million in the 12 months leading up to December 2012; and the total fraud transactions rose from $223 million to just over $300 million.
Alarmed by increasing occurrences of credit card fraud, and how current anti-fraud systems are inadequate, Evan Gao and Daryl Hunter decided to act – not only to make fraud protection more effective but easier. And then came AuthoPay.
AuthoPay is a cloud-based, plug-in system that uses address verification integration into the merchant’s site to ensure the person ordering the goods is the owner of the credit card; and authorises the delivery of those goods to the nominated physical or virtual address. Phone orders are similarly covered.
“Credit card fraud is a massive issue and growing yet until now we believe there has not been any system that does a good enough job for merchants. Most systems at its best guess a transaction is a fraud, we are about to change this,” says Daryl Hunt, Co-Founder of AuthoPay.
“Having run online shops in the past we knew there was a gap in the market to fill. The majority of current credit card fraud detection are based upon guessing that a fraud occurred without any true verification of the end user.”
Taking the guess work out of credit card fraud protection, AuthoPay verifies the end user once and for all by using their credit card number and a one-time code on their credit card for a particular address. This means that to commit fraud, the criminal must steal both credit card and online banking details.
“Even if this is the case we have a third method to capture unusual deliveries to a single address anywhere in the world,” says Hunt.
AutoPay’s business model is to charge a flat fee to access the service and then a nominal transaction fee. They are also looking at partner opportunities with providers that would allow them to leverage off their size and customer base.
Hunt says the business has the potential to grow into an industry standard solution with a clearly defined revenue model.
“From the very start, we want to be a responsible online enterprise with 5% of our profits going directly back into charitable causes. We are here to help merchants and destroy credit fraud.”
AuthoPay currently has 10 live trial customers prior to its September launch; and responses from both merchants and consumers have been largely positive – “they see it as a win/win”. In the trials they’ve conducted to date, merchants have even reported a drop in actual fraud attempts.
But with a technical background, Hunt says marketing has been a challenge.
“You have to accept you cannot be all things and outsource or hire.”
Daryl Hunt’s top tips for startups:
- Have a clear execution plan in terms of time and resources required to achieve your objectives, then double it.
- Build a scaleable solution from the start, you only get one chance with customers so make sure your infrastructure supports and is scalable enough to support your future growth projections.
- Make sure you understand the competition and your legal obligations.
- Work hard and never give up.
Visit authopay.com.au for more information.