Visa issuers will be required by October of this year to provide a transaction alert service to cardholders — but if they don't have a plan in place this week, Visa will step in with its own offering.

The Visa Purchase Alerts program gives issuers a way to comply without devoting more resources to transaction alerts. And on Friday, April 29, it will become the default option for issuers that have not selected an alternative.

While the e-mail alert portion of Visa Purchase Alerts is free, issuing banks will pay a 1-cent fee to the bank identification number for each delivered text message alert. Banks can opt out of the text messaging alert, and choose to allow cardholders only an e-mail alert, but Visa warns against that option.

"Alerts have been out there for seven or eight years, but in looking at our different surveys, we found that about two-thirds of consumers were not embracing or using services as well as they should have," said Mark Nelsen, senior vice president of risk products and business intelligence at Visa. "They either weren't using it, or just had an e-mail alert, and we can move beyond e-mail at this point."

The Visa Purchase Alerts service also supports push notifications through a mobile banking app that a transaction appearing unusual has taken place.

Visa has other options in place for issuers wanting to strengthen an existing alerts system. For example, Visa offers a white label service in which issuers use their own alerts but operate through Visa's back-end system. The Foster City, Calif.-based card brand also provides a mobile app that issuers can brand as their own for push notifications.

Another option allows issuers to have their cardholders enroll in Visa Purchase Alerts on a Visa-hosted website, Nelsen said.

Visa established the requirement and adherence deadline seven months ago because it wants issuers to engage their cardholders more in the transaction process, Nelsen added.

"Visa wants that interaction, whether it is geo-location for fraud, transaction controls to block their card, and transaction alerts to monitor activity," Nelsen said. "A big theme and strategy we have is how to engage consumers more with transactions and payments."

It was surprising for Visa to learn that while the largest issuers had alert programs in place, the service did not cover all of the bank's portfolios, Nelsen said.

"They may offer alerts on the credit side, but not the debit side," he added. "We want issuers to prioritize this so we can give all consumers the option to enroll."

Aside from bringing more attention to alert programs to cardholders, the requirement has also been good for issuers because it "required all of them to look at what capabilities they have and what they may need to upgrade or refresh with technology that is more efficient and powerful," Nelsen said.

Even after issuers comply with the requirement this year, there is no guarantee it will translate to more cardholders taking an active role in protecting their accounts.

"Unfortunately, I still think a significant portion of the U.S. population feels it has no skin in the fraud game," said Julie Conroy, research director and fraud expert with Boston-based Aite Group. "Enrolling in alerts is an effective fraud measure, but too many consumers just don't take the time and effort to do it."

Banks that have established effective alert systems with their cardholders are seeing significant fraud prevention benefits because of that early interaction, Conroy said.

To get more consumer attention, banks should provide incentives to customers to enroll in an alerts program, maybe with a cash reward for their account, Conroy said.

"The bank will get the benefit back multiple times on the back end in terms of the fraud prevention benefits across their portfolio," she added.

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