There’s no doubt about it. Selling and accepting orders online is a great way to expand your business. Unfortunately, the risk of fraudulent transactions where the cardholder is not present can make it difficult to sustain a profit, especially internationally. In the event that a customer uses a fraudulent credit card, unfortunately the merchant is typically held responsible.
Before Payer Authentication, the only option a merchant had was to painstakingly screen each and every transaction, looking for an indication that it may or may not be fraudulent. This method is time consuming and not effective in protecting the merchant or the customer in the event of fraud.
Online merchants can now reduce their risk of fraud by up to 70%, by implementing 3-D Secure Payer Authentication software on their site. This is a security program that provides protection to the consumer and the online retailer both before and after an order is placed.
How does it benefit the consumer?
Enrolling your Visa or MasterCard in Payer Authentication (Verified by Visa or MasterCard SecureCode) will force you to create a special password that will be entered whenever you make an online purchase. This information cannot be found anywhere on your credit card, so you are even protected if an unauthorized user physically has your credit card, as long as they do not know this password.
How does it benefit the Online Retailer?
Only when the correct Visa or MasterCard code is entered in your checkout will the credit card be charged and the transaction accepted. If the cardholder is not enrolled in Payer Authentication, you can force them to enroll before the transaction is complete if you choose to do so.
There are two types of coverage offered by 3-D Secure Payer Authentication:
- Fully Authenticated Transactions
- Transaction Liability Shift
Fully Authenticated Transactions
If Visa or Mastercard determine that the transaction was fully authenticated by the customer, payment is 100% guaranteed. This means that the amount collected by the merchant can never be charged back.
In certain circumstances, Visa or MasterCard will determine that the information that the customer has provided is sufficient enough for the transaction to be processed. As a result, if the transaction were to be fraudulent, the liability shifts from the merchant to the card issuing bank. In this instance, if a chargeback were to be filed, the merchant would never even be aware of it. It would be the bank’s responsibility to reimburse the cardholder.
In short, this means less chargebacks for the online merchant and the possibility of expanding their business into higher risk countries that they would normally avoid. Talk to your payment processor to find out if you can implement this software on your website. While the implementation is somewhat rigorous, the resultant protection against fraud is invaluable.