Visa has developed a new service that aims to reduce prepaid card fraud.
The company's prepaid clearinghouse service is a centralized database that allows financial institutions, processors and prepaid program managers to share information about fraudulent activity, according to Visa's Feb. 27 press release. Companies can pool data on prepaid card enrollments, funding, suspected fraudulent information and past fraud schemes, according to the release.
All financial institutions and program managers that issue Visa prepaid cards will be required to report information to the database by June 2015. The database can also receive input on multiple brands of prepaid cards.
The database "will deliver a comprehensive compilation of prepaid account-level data from across the industry, which will help reduce prepaid fraud losses for consumers, financial institutions and their clients," Brian Triplett, a senior vice president and head of North America prepaid products at Visa, said in the release. "Criminals are increasingly targeting prepaid products which more and more consumers are using for every day purchases. While existing laws and industry safeguards help limit most consumer losses, [the service] is a huge step forward for the industry towards proactively preventing fraud schemes targeting prepaid cards."
The prepaid clearinghouse service is modeled on Visa's issuers' clearinghouse service, another centralized database that attempts to reduce bankcard credit and fraud losses.