Credit card fraud on the Internet is a real problem, not so much for consumers, but rather for merchants. While all major credit card brands waive the online fraud liability for consumers . . . . merchants, not banks, are bearing the brunt of the Internet card fraud problem. A new survey of more than 160 companies reveals that 12 times more fraud exists on Internet transactions and that e-tailers are paying credit card discount rates that are 66% higher than traditional retailer fees. The research also found that Web merchants bear both the liability and costs in cases of fraud, while credit card companies generally absorb the fraud cost for traditional retailers. The difference in the liability between e-tailers and brick-and-mortar merchants is linked to whether or not a physical payment card is presented. With Internet transactions, merchants do not physically see the card and are therefore more accountable if the payment card account used for payment is being used fraudulently. The Gartner survey shows e-tailers are paying an average credit card discount rate or merchant rate of 2.5% plus about 30 cents a transaction versus an average for traditional retailers of about 1.5% plus 30 cents a transaction. Gartner also found that e-tailers are spending about four times more to resolve and process chargebacks than brick-and-mortar retailers do. Gartner says e-tailers must pay for Internet payment gateways and fraud detection, which can add another 50 cents to each transaction.  Indeed CardWeb.com has received reports of Internet merchants, particularly software vendors, who have encountered fraud rates as high as 35%, that threaten the ability of such firms to continue as going concerns. The Gartner research suggests that credit card companies have failed to offer e-tailers a cost-effective solution for fraud prevention. However a number of card payment processors such as First Data have recently introduced new Internet fraud detection programs. The real solution lies in establishing a higher level of card security, such as digital signatures, that give payment cards used on the Internet the same status as cards used in the physical world.