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3-D Secure – Advantages and Disadvantages for Merchants

Credit cardIf you are a merchant, you definitely care about the security of your online transactions. One of the ways to achieve that is implementing 3-D Secure. The name probably rings a bell but if not, let us give you a short summary of what it is, together with the advantages and disadvantages that come with it.

3-D Secure – Visa and MasterCard Security Standard

3-D Secure system is a set of security standards developed by Visa, but implemented also by other card organizations. The Visa system is called Verified by Visa and the MasterCard system is offered as MasterCard SecureCode. In a nutshell, if 3-D Secure is implemented then straight after entering customer’s card information, he or she is asked to enter a password which helps the card issuer to identify the card holder.

How does it help – the advantages

In case of a transaction completed with 3-D Secure, it is the card issuing bank that assumes the risk, not the merchant. And most importantly, chargebacks are not permitted if the merchant complies with the acquirer’s legal requirements (3-D Secure has been activated for the card; the payer has been redirected by the merchant to a website where the card authentication takes place; the authentication process was successful). 3-D Secure definitely reduces the risk of fraudulent transactions and decreases the number of disputed transactions. It also boosts consumer confidence which can result in increased sales.

Any disadvantages?

Yes, there are some. For example, each extra security field added to an online form can seriously lower the number of completed transactions. Moreover some customers might not know what 3-D Secure is and they can close the browser window. This of course will lead to lost sales. You must also remember that there is an extra fee for the service.

The end

Using 3-D Secure is advisable but the merchant also has to decide whether adding this extra step will be in the best interest for their business. In general, each merchant should have an idea of the volume of sales that they will lose and will then calculate how much can be gained on chargebacks and fraud by offering 3-D Secure. 3-D Secure definitely makes your payments safer and more trustworthy but for some of the clients it might be an inconvenience.

Małgo knows how to X-ray any company with a beautiful smile on her face; she also has an extraordinary collection of shoes and drinks a lot of yerba mate.

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