This article is the result of a small study of the differences in the development of the card industry in the United States and Russia. Although the purpose of the study was to identify the factors that gave an impetus to the development of electronic currencies in our country in volumes that are significantly ahead of the West, despite the fact that the very ideology of building Visa/MasterCard is much superior to centralized virtual wallets.
In this story, we will touch on only one factor – the distrust of Russians to maps. And the first detail that immediately catches your eye is Visa Zero Liability on the American Visa website, which states that “You will not be held responsible for unauthorized use of your card. You are protected if your card is lost, stolen or used fraudulently.” And at the bottom, in small letters, it says "Only covers cards issued in the United States." But the dear reader of course knows that this rule is one of the basic rules of the International Payment Systems (IPSS) and works just as well in Russia. Only you ever heard that at least one bank explained to yo“ "in case of what we will return your money”? I'm not.
Sometimes the situation even reaches the point of absurdity, when large reputable banks, such as Raiffeisen Bank, sell insurance against "unauthorized use of your card” for 190 rubles a month, you probably offered something similar. At the same time, if the card is copied without this service, even with a pincode (the chip is not copied), the bank will still have to return the money according to the rules of the Ministry of Internal Affairs. But most banks do not want to engage in claims work with us, for obvious reasons. Not so long ago, another fairly well-known bank actually "sent" my work colleague with a request to return a payment of 1000 rubles debited without authorization (by recapping) – "go write a statement to the police".
Along with the reluctance to engage in unnecessary work, banks also practice substitution of concepts. For example, almost all banks advertise 3D Secure technology to cardholders, which in fact primarily protects retail outlets from fraud, and not cardholders! Historically, the risks for fraud lie with the acquiring bank, and only then the acquiring bank transfers chargeback to retail outlets. In most cases, when challenging such payments, the Ministry of Internal Affairs takes the side of the cardholder. Hence, a new type of fraud, Friendly Fraud, was born – when the cardholder first buys, and then disputes the payment himself. And it is 3D Secure that protects the acquirer / point of sale from chargebacks “the cardholder did not authorize the transaction” – he passed the confirmation by SMS, so he paid for it himself. For an ordinary cardholder – it is not warm or cold from 3D Secure, and the carder certainly will not buy an iPhone where you need to enter the code from the SMS. Just as this technology primarily protects the issuers themselves – if you don't support it, but the 3D Secure channel – then the issuer pays for fraud (Liability shift).
A little history. In the United States, credit cards were initially distributed by regular mail – they were sent out in envelopes. In the pursuit of distributing as many cards as possible, banks sent cards to phone books, sometimes reaching the point of absurdity – a small child or a pet could get a credit card. Naturally, the cards were stolen from mailboxes, sometimes even by the post office employees themselves. Banks suffered losses.
This continued until 1970, when the US Congress passed a law prohibiting the mailing of cards without the holder's permission. At the same time, most cases of fraud involved the theft of cards from wallets, pockets, or prostitutes from their clients.
In 1970, the bill “Title 15 U.S. Code § 1644 — Fraudulent use of credit cards”was issued. The law was used to charge defendants with using fake, altered, lost, stolen or fraudulently obtained credit cards. But this did not reduce the number of card scams.
And finally, in 1974, Congress passed the Fair Credit Billing Act, which for the first time legalized:
Fair Credit Billing Act and is considered the progenitor of chargeback. Then the law was transformed into the rules of the IPU, and the rules were overgrown with amendments.
In Russia, cards (issue) came only in the 90s, the banks had enough other concerns: securities trading, banking crisis, etc. So no one promoted cards as a "secure payment method". Some readers probably remember how we started wallets to link virtual cards to them and pay online.
And the fact that in the United States for decades was formed with the help of laws and regulations, developing the card industry, we are carefully hushed up and not advertised.
In this story, we will touch on only one factor – the distrust of Russians to maps. And the first detail that immediately catches your eye is Visa Zero Liability on the American Visa website, which states that “You will not be held responsible for unauthorized use of your card. You are protected if your card is lost, stolen or used fraudulently.” And at the bottom, in small letters, it says "Only covers cards issued in the United States." But the dear reader of course knows that this rule is one of the basic rules of the International Payment Systems (IPSS) and works just as well in Russia. Only you ever heard that at least one bank explained to yo“ "in case of what we will return your money”? I'm not.
Sometimes the situation even reaches the point of absurdity, when large reputable banks, such as Raiffeisen Bank, sell insurance against "unauthorized use of your card” for 190 rubles a month, you probably offered something similar. At the same time, if the card is copied without this service, even with a pincode (the chip is not copied), the bank will still have to return the money according to the rules of the Ministry of Internal Affairs. But most banks do not want to engage in claims work with us, for obvious reasons. Not so long ago, another fairly well-known bank actually "sent" my work colleague with a request to return a payment of 1000 rubles debited without authorization (by recapping) – "go write a statement to the police".
Along with the reluctance to engage in unnecessary work, banks also practice substitution of concepts. For example, almost all banks advertise 3D Secure technology to cardholders, which in fact primarily protects retail outlets from fraud, and not cardholders! Historically, the risks for fraud lie with the acquiring bank, and only then the acquiring bank transfers chargeback to retail outlets. In most cases, when challenging such payments, the Ministry of Internal Affairs takes the side of the cardholder. Hence, a new type of fraud, Friendly Fraud, was born – when the cardholder first buys, and then disputes the payment himself. And it is 3D Secure that protects the acquirer / point of sale from chargebacks “the cardholder did not authorize the transaction” – he passed the confirmation by SMS, so he paid for it himself. For an ordinary cardholder – it is not warm or cold from 3D Secure, and the carder certainly will not buy an iPhone where you need to enter the code from the SMS. Just as this technology primarily protects the issuers themselves – if you don't support it, but the 3D Secure channel – then the issuer pays for fraud (Liability shift).
A little history. In the United States, credit cards were initially distributed by regular mail – they were sent out in envelopes. In the pursuit of distributing as many cards as possible, banks sent cards to phone books, sometimes reaching the point of absurdity – a small child or a pet could get a credit card. Naturally, the cards were stolen from mailboxes, sometimes even by the post office employees themselves. Banks suffered losses.
This continued until 1970, when the US Congress passed a law prohibiting the mailing of cards without the holder's permission. At the same time, most cases of fraud involved the theft of cards from wallets, pockets, or prostitutes from their clients.
In 1970, the bill “Title 15 U.S. Code § 1644 — Fraudulent use of credit cards”was issued. The law was used to charge defendants with using fake, altered, lost, stolen or fraudulently obtained credit cards. But this did not reduce the number of card scams.
And finally, in 1974, Congress passed the Fair Credit Billing Act, which for the first time legalized:
- 60-day period during which the cardholder can challenge an error in the payment statement.
- If the cardholder finds an error, they must send a challenge request in writing to their issuer.
- The Cardholder is not responsible for using a lost, stolen card, or using the card without permission. You just need to call the bank. Although the law sets the maximum liability of the holder at$ 50 when using a Face-to-Face card, Visa/MasterCard does not charge this fee. And if a fraudster uses the card online or over the phone, the cardholder is completely exempt from liability.
Fair Credit Billing Act and is considered the progenitor of chargeback. Then the law was transformed into the rules of the IPU, and the rules were overgrown with amendments.
In Russia, cards (issue) came only in the 90s, the banks had enough other concerns: securities trading, banking crisis, etc. So no one promoted cards as a "secure payment method". Some readers probably remember how we started wallets to link virtual cards to them and pay online.
And the fact that in the United States for decades was formed with the help of laws and regulations, developing the card industry, we are carefully hushed up and not advertised.
