September 2, 2010, 2:08 PM

Text messages protect gamers’ online payments

Payment processer Peanuts Lab deploys Red Oxygen technology for gamers.

Lead Photo

Peanut Labs, which processes payments from consumers who play online games, has introduced a text messaging service that warns players about suspicious transactions.

The service uses text messaging technology from Red Oxygen, a company that sells text message software and services. Peanut Labs serves consumers who play virtual world, Facebook and other social media games, as well as helps developers set up virtual currency schemes in games.  Players spend real money to purchase virtual currency and virtual goods—say, swords or digital sports players—for online games.

“Left unprotected, as much as 50% of a gaming publisher’s transactions for intangible goods like virtual currency can be fraudulent, so it was critical for us to find a reliable way to eliminate this risk to our customers,” says Murtaza Hussain, Peanut Labs president.

When a player makes a transaction through the Peanut Labs network, its technology measures the risk of that transaction, with algorithms determining whether to accept, decline or flag payments. Flagged transactions trigger text messages to the player’s mobile phone; the Red Oxygen technology automates the sending of the text messages. The message contains a number that the player then must enter on the Peanut Labs web site; entering the number gives Peanuts Lab even more data about the player, such as his location, which helps to further gauge the credibility of the transaction.

“The review process used to be completely manual, which, as you can imagine, required a great deal of time and resources,” Hussain says.

The system flags between 10% and 15% of transactions, Peanut Labs estimates. Red Oxygen receives a volume-based subscription fee from Peanuts Lab, but a Red Oxygen spokeswoman did not detail that fee.

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