We can order food, buy groceries, and do a lot of other things online, as digital transactions continue to grow in popularity. You can shop for multiple items and compare rates of various service providers from the comfort of your own homes.
But the question is, how sure are you of your safety whenever you enter your personal details on the payment gateway check out page? From your name, address, phone number, and most importantly, your card details, it’s normal to feel concerned about whether it’s safe to use your credit or debit card when doing purchases online.
The good thing is, merchants are also concerned about consumer confidence, and the importance of data security to avoid scams, fraud, and disputes affecting their business.
The payer authentication known as 3D Secure (3-Domain Secure) is one effective online security feature that lessens the number of chargebacks and protects consumers and merchants from fraudulent transactions.
Just how effective is 3D Secure?
What is 3D Secure?
3D Secure is a six-digit PIN that helps prevent fraud in online credit and debit card transactions. This additional security was created by Visa and MasterCard. You see it on eCommerce websites as “Verified by Visa,” “MasterCard SecureCode,” American Express “SafeKey,” and JCB “J/Secure.”
It is a technical standard created by Visa and MasterCard to further secure CNP (Cardholder Not Present) transactions over the Internet.
3D Secure protects a buyer’s credit card against unauthorized use when shopping online. This simple service enables buyers to validate transactions they make over the internet by requesting a personal code, which is usually sent to their registered cell phone numbers or email addresses as a one-time PIN. It helps protect against fraudulent use by unauthorized individuals.
Moreover, this shifts the liability to consumers in the event of fraud and disputes. Because the PIN can only be accessed by the customer through personal e-mail or mobile number, the chances of fraudulent transactions are slim. The merchant is no longer liable for a chargeback when the 3D Secure PIN has been entered, and the transaction went through successfully.
How does 3D Secure Work?
The payer authentication is a three-part process where there are also three parties involved. This is where the name 3D comes, from the three-domain model used to provide the additional layer of secured authentication between the financial authorization process and the online authentication process. The three domains used to provide this security are:
- Acquirer Domain: The bank and the merchant receiving the transaction payment.
- Issuer Domain (such as Visa or MasterCard): The bank that issued the credit or debit card used for the transaction.
- Interoperability Domain (such as payment system): The infrastructure provided for the card that’s used to support the 3D Secure protocol
When you, as a merchant, have 3D Secure enabled on your website and your customer uses the card that is enrolled in the the program, the process looks like this:
- The customer enters their credit or debit card information in the payment form.
- The payment gateway contacts the card network and gets the message that the card is registered in the program.
- The customer sees the 3D Secure page when they need to authenticate themselves to the issuing bank by entering the password or a one-time PIN.
- The result of the 3D Secure authentication goes to the payment gateway, and the transaction details are submitted to the acquiring bank.
- The transaction is authorized by the acquirer.
- The customer can see the response about whether the transaction is successful or not.
Advantages of 3D Secure for merchants
- Chargeback protection: When you use Verified by Visa, you’re guaranteed to never receive a chargeback. This protection helps secure you against friendly fraud or chargeback fraud.
*Note: MasterCard does not have a similar policy.
- Consumer confidence: As a CNP merchant, consumer confidence is critical. Many customers will feel more confident knowing there is an extra level of security in place to protect their data.
- Interchange benefits: You may be able to access lower interchange fees and benefit from longer payment terms with your acquirer.
- Liability shift: As you know, when a chargeback occurs, you’re typically liable for this transaction. With 3D Secure, the liability is shifted from you to your issuing bank. Note: it’s important you review all documentation provided by your issuer to ensure you understand the rules and regulations regarding 3D Secure implementation.
- Reduces fraud – One of the advantages of 3D Secure is that it reduces fraud. It also makes shopping or eCommerce safer, enhances brand loyalty, it is easy to use, customer confidence improves on websites, and therefore increases online spending.
Advantages of 3D Secure for customers
- Minimize risk of chargebacks – With the help of 3D Secure, you will be able to confirm whether the merchant you’re buying from is legitimate or not. If a fraudster tries to purchase from an online shop using your account, the transactions will be prevented this from happening, and you won’t have to deal with disputes and chargebacks.
- Reduce online fraud – 3D Secure significantly reduces the number of fraudulent online activities including identity theft and unauthorized card use. It protects the card data of genuine cardholders and increases consumer confidence in making purchases online.
3D Secure Takeaways
It’s important to remember that while customers do want the assurance of security in their transactions and personal data, they also do not like extra confirmation steps and passwords. This means you must make sure you clearly explain that you are using 3D Secure verified by Visa or MasterCard SecureCode to provide them with extra protection.
Also, be sure to provide them with clear information in the early stages of the checkout process that explains the 3D Secure process in simple terms, to allow the customer to be prepared for the extra authentication step.
Remind them that this extra security is free of charge and that there aren’t any additional fees hidden within the overall transaction. Provide a link that gives them more information about the program.
Additionally, make sure the Verified by Visa or MasterCard SecureCode logo is clearly displayed so that there will surely be a smooth flow in your merchant life.
Accept online payments securely and eliminate chargebacks. Talk to the 3D Secure professionals at Allied Payments on how to get started securing your website.