Benefits of 3D Secure Payment Processing
Selling products and services online has led to greater opportunities for fraud, which companies have been looking for ways to overcome. 3D Secure is a technological approach that provides greater security with online transactions. 3D Secure is named in this way due to the fact that three parties are involved in the process of verifying the transaction. The process is known as a “3 Domain Server process”. Narrowing down in greater detail, the three involved parties are the company that is selling the product or service being purchased online (the merchant), the bank of the company that is selling the product or service, and the company that issued the credit or debit card. In the case of the card company, typically this is either VISA or MasterCard, though other credit card companies do also offer a 3D Secure service. VISA’s version of 3D Secure is called Verified by VISA, and MasterCard’s is named SecureCode. The process involves more steps than a traditional online transaction, as after entering card details, the customer is then prompted to provide more information to satisfy the card issuer that they are the card owner. They are asked to provide a password, and if this is the same one the card issuer has on file then the transaction is approved. Given these extra steps, the question is, why would a merchant swap to using 3D Secure?
One of the biggest benefits of 3D Secure is the fact that it helps increase the level of security associated with purchasing goods online. This is good for the buyer, the seller, the bank and the credit card company that are involved in the sale, especially considering that 47% of global credit card fraud happens in the USA. By using 3D secure an extra step is built into the process which makes it that much more difficult for fraudsters to surmount. This is because while it might be relatively easy to steal card details, it is difficult for fraudsters to know the 3D Secure password. Even if the shopper forgets their password, they have to enter information such as birth date to proceed, which typically a fraudster would not have. While a person might have the ability to write down the card details quickly, in many cases they simply would not have access to these other details, and certainly not the 3D Secure password, which is not typically written down (and like any password, nor should it be).
Another great benefit of 3D Secure, highlighted by Worldpay, is the fact that financial liability shifts when merchants have 3D Secure in place. More than half of ecommerce chargebacks are believed to come about as a result from card holders saying that they did not authorise a particular payment. Until now this has been difficult to refute, and liability has often ended up with the merchant. However, with 3D Secure, since it is the credit card issuer that is validating that the card owner is the person making the transaction, the liability for the transaction has shifted to them instead. For many ecommerce merchants the benefit is that there are fewer chargebacks and disputes about transactions, and this saves the merchant money.
Security and liability benefits aside, 3D secure is also thought to increase consumer confidence regarding shopping online. Research has shown that knowing that this extra level of security in place helps customers to feel safer about online shopping. It is also believed that this encourages customers to spend more online on average, which is good for business. When this is considered in conjunction with the significant security benefits to protect both the consumer and the merchant from fraudsters, and the fact that liability for chargebacks are reduced, many ecommerce merchants are now switching to 3D Secure.