Our endorsement of 3D secure online payment processing has grown exponentially over the last five years. When it debuted, we loved the concept, but the process needed refining as it caused an epidemic of shopping cart abandonment. We then started reading up on it, and warmed to the concept when we came across the Amtrak-Cardinal Commerce study; and finally the release of 3D secure 2.0, which greatly reduced friction in online purchases.
Still, the stigma that 3D secure carries is hard to shake for some online merchants — they want their checkout processes to be as simple as possible. With the recently released Visa Claims Resolution system to mitigate chargebacks, however, there is more incentive than ever to use 3D secure processing.
A refresher: This is how 3D secure works in online payment processing
In the first iteration of 3D secure, a consumer receives a credit card and enrolls in 3D secure, in this case Verified by Visa. They apply a message and a password only known by the consumer and his/her bank when enrolling. When the consumer thereafter makes an online purchase, a small popup window with the credit card logo appears during checkout and requests the message and/or password, or possibly a code which the consumer retrieves via mobile. This is how the consumer authenticates his/herself as the cardholder for the purchase.
When 3D secure 2.0 was launched, the consumer sees a rotating wheel in place of the VbV window seeking the password, message or code. The wheel appears as the authenticity check is taking place in the background, making for a more user-friendly experience.
While well-intentioned, it’s not difficult to see why 3D secure schemes such as VbV and MasterCard’s SecureCode have garnered a lukewarm response. It is a bit more friction, an extra step, despite making online purchases safer.
Why 3D secure is pivotal with Visa Claims Resolution
First, if a merchant is using 3D secure for consumers to make online purchases, it virtually absolves the merchant of any liability in cases of fraud. When a consumer makes a successful purchase using 3D secure, then tries to file a chargeback with his/her card issuer, claiming they never made the purchase, all parties involved know that it was the cardholder who did so, since s/he completed the 3D secure process.
It is possible that a consumer has purchased a product using 3D secure and perhaps the product has arrived damaged. In cases of such, the merchant is encouraged to offer an exchange or provide online store credit.
Secondly, since all fraud and authorization cases will fall under the allocation model in the Visa Claims Resolution, it makes perfect sense for high risk merchants to protect themselves in every way possible.
“Visa is quoting that 60 to 80 percent of the disputes that will result after VCR is live would be in the allocation flow,” said Mary Barbarow, Director of Chargeback Products at Verifi, in a recent webinar. “That means they’re anticipating that the total volume of fraud disputes is going to increase. Merchants can protect themselves by participating in 3D secure.”
Merchants are warming to 3D secure
We alluded to 3D secure’s rocky introduction, where many merchants thought was more hindrance to online payment processing than security. Slowly, the initial perception is changing. According to research from payments thinktank Aite Group, 18 percent of all transactions in 2015 involved the use of 3D secure, up from only 6 percent in 2013.
The 3D secure concept is much different now:
- The card brands – Visa, MasterCard, American Express and Discover – are relying more on cardholder data when they assess risk in transactions.
- With the 2.0 model, the card brands have strayed from the popup window (which drove away customers in the first iteration) and instead have turned to one-time passwords, backend authentication and biometrics (usually a fingerprint).
- 3D secure is available in more channels like wallets, app and browser payments.
3D secure online payment processing with Instabill
Instabill offers 3D secure and non-3D secure merchant accounts for online payment processing to high and low risk merchants. Better, we offer direct live support and one dedicated merchant account manager. Discuss the possibilities today at 1-800-530-2444.