3D secure not only adds an additional layer of protection for cardholders, but for merchants as well. During an online checkout, cardholders are asked to enter an additional password to verify they are truly the cardholder.
Ecommerce business owners must make the decision to include or avoid 3D secure technology on their websites. In some cases, depending on the businesses area of risk, banks may make implementation of 3D Secure mandatory.
What is 3D secure?
3D Secure stands for “Three Domain Secure” – One domain is the retailer’s bank, or the acquiring bank, the second domain is the cardholders bank, or issuing bank, and the third is the infrastructure that supports 3D Secure’s protocol.
How does it work?
After completing the checkout process on a website which participates in 3D secure, the cardholder is asked to provide a password (if previously enrolled) or to set up their new Verified By Visa or MasterCard SecureCode password. The cardholder is normally redirected to the issuing bank’s (cardholders bank) website for authorization.
Though growing in popularity, 3D secure is not supported by every credit card company. Discover Card and American Express have their own authentication process known as Safekey, available only in the UK and Singapore. Visa gift card and business card holders under multiple names are detected and not prompted to enroll or enter a passphrase.
With a card which is not yet enrolled in 3D Secure (either Visa, Maestro or MasterCard) and when shopping on a website allowing only 3D transactions, a cardholder is allowed to opt out of the scheme a minimum of 3 times (depending on the card issuer), up to an unlimited number of opt outs. In some cases, the card issuer may require authentication the first, second or third time. If the cardholder opts out the maximum number of times, they will no longer be presented with a “No thanks” button, and may be barred from shopping online with online retailers that utilize 3D Secure until they enroll their card, though this may be dependent on the card issuer.
Chargeback protection – Verified by Visa ensures you will not receive a chargeback on your merchant account. This can help prevent “friendly fraud” when a cardholder makes a purchase and files a chargeback, knowing the bank will side with them. (MasterCard does not support chargeback blocking).
Increased online shopping – Many customers may hold back from online shopping due to fear of online fraud. 3D secure service adds that extra protection customers look for when online shopping, making customers willing to purchase more, and with higher frequency.
Interchange benefits – With your acquiring bank, benefits of implementing 3D Secure can include lower discount rates, and in some cases longer payment terms.
Liability shift – Usually, the merchant will pay the price when a transaction is disputed by the cardholder. However with 3D Secure the liability shifts from the merchant to the cardholders bank. The benefits brought about by a liability shift makes 3D Secure a popular service merchants ask for when looking for a merchant account provider.
Some customers don’t like it or understand it – In market places where 3D Secure is not mandated, cardholders are not always sure what to do when presented with the verification page. An added extra step in the checkout process, in which a customer may need to take the time to enroll or remember their password that has long been forgotten, may cause some give up and seek another merchant that doesn’t use it.
All in all, the pro’s outweigh the con’s. In a world where little is sacred anymore, added protection when it comes to your finances and personal details can never hurt.