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Many e-commerce start-ups may have gone out of business because of the size of losses from fraudulent transactions.
"Up to five percent of turnover of dot.coms could be taken by losses from fraudulent credit card transactions and purchases," said Terence Gibbons, a spokesman for Visa.
"For many companies security was not the biggest issue when they set up their Web site," he said.
"But then they could not sustain the losses that they were incurring from fraud and had not factored such high losses into their business plan," Gibbons said.
Gibbons said the level of fraud with credit cards, in general, was very low but credit card fraud on the Internet is up to four times higher on-line than off-line.
Visa is now trying to get in early with companies to get a basic of level of security to protect consumers and retailers.
"A lack of consumer confidence is holding up e-commerce so Visa is trying to develop a common payment system for all electronic systems for all electronic devices," he said.
A disproportionate number of Internet payment card transactions are disputed according to Visa.
Visa said most of these disputes occur because the act of entering card data into a Web site payment page does not prove the identity of the cardholder or guarantee that the card number is genuine.
Equally, cardholders also need proof that an Internet merchant is honest and reliable.
Visa is implementing a new initiative called 3D (3 domain) SET (Secure Electronic Transaction) which was developed with Mastercard to set up basic standards for verification of the identity of both credit card holders and merchants.
European Visa card issuers who sign up merchants to accept Visa cards must be capable of processing 3D SET transactions by October 2001.
It spreads the security across the client server architecture of the payment process between consumers and retailers, retailers and merchants and banks and banks and banks.
To encourage take-up, from 01 June 2001, merchants using 3D SET will no longer be subject to payment for transaction reversals whenever a cardholder denies that a genuine transaction has taken place.
Visa said its cards are used in 52 percent of all consumer Internet transactions while a recent Visa survey found that 80 percent of UK Internet shoppers used payment cards on-line.
Internet sales worldwide are expected to account for almost 10 percent of Visa transactions in 2004.
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