CyberSource has screened for fraud by asking a series of questions to help rate a transaction's risk. But the method isn't foolproof, and customers can be inadvertently turned away, says William Donahoo, CyberSource's VP of marketing.

To improve its accuracy, CyberSource needed to know what happens to transactions all the way through the process. "Getting ahold of enough data to do accurate modeling was crucial to improving accuracy," Donahoo says. "With the new set of models that we created with Visa, we increased our accuracy by 20% to 35%."

Patrick Seiler, financial controller for Mondera.com Inc., a New York online retailer of luxury items such as jewelry, says screening for fraud works.

His company, which launched in August, was hit hard by fraudulent charges, losing almost 3% of its revenue. Once Mondera began began using CyberSource's service, the number of chargebacks fell to 0.5%. "CyberSource looks at all the different metrics, and all we have to do is look at the rating that the transaction has been given," Seiler says. "They kick out the bad guys before we even have to look at the order."