The role of 3D Secure
Internet transactions are classed as ‘cardholder not present’ (CNP) transactions. Until recently, there was no easy way for you to identify a cardholder and confirm that it was indeed the legitimate cardholder entering the card details.
A significant proportion of chargebacks can arise as a result of the cardholder denying that they authorised a transaction. It is traditionally very difficult for you to successfully appeal against this sort of chargeback. The 3D Secure technology is designed to reduce the possibility of fraudulent card use by authenticating the cardholder at the actual time of the transaction and subsequently reducing your exposure to disputed transactions and chargebacks of this type.
What is 3D Secure?
3D Secure stands for Three Domain Secure – the payment industry’s internet authentication standard which has been developed by the major card schemes. Visa has called their version of the scheme ‘Verified by Visa’ and MasterCard has called its equivalent initiative ‘MasterCard SecureCode’. These are both collectively referred to as 3D Secure.
3D Secure authentication requires the cardholder to register their card with the appropriate scheme operator. This is a one-time process that takes place on the card issuer’s website and involves the cardholder answering security questions to which only the card issuer and cardholder know the answer. The cardholder selects a password and agrees on a secret phrase, which will be used by the card issuer during each online transaction.
In summary 3D Secure can be thought of as an online version of ‘Chip and Pin’ technology, whereby the cardholder has a personalised password registered with their card that is entered during the checkout process.
For further information please visit the Verified by Visa and MasterCard SecureCode websites.