3-D Secure

The 3-D Secure™ protocol was developed by Visa to improve the security of online payments. The protocol is offered with the service name Verified by Visa. MasterCard has also adapted a similar protocol called MasterCard SecureCode.

  • Extra security measure for card transactions.
  • Essentially ‘Chip and PIN’ for online payments.
  • Reduces instances of fraudulent transactions.

Both allow authentication of cardholders by their issuers at participating merchants. The objective is to benefit all participants by providing issuers the ability to fully authenticate cardholders through the use of a password during online purchases, cutting down the chances of credit card fraud and improving card transaction efficiency.

3-D Secure ties the financial authorisation process with an online authentication. This authentication is based on a three-domain model (hence the 3-D in the name).

The three domains are:

  • Acquirer domain (the merchant and the bank to which money is being paid)
  • Issuer domain (the bank which issued the card being used)
  • Interoperability domain (the infrastructure provided by the card scheme, credit, debit, prepaid or other type of finance card, to support the 3-D Secure protocol)

Interoperability domain includes the internet, MPI, ACS and other software providers

The protocol uses XML messages sent over SSL connections with client authentication (this ensures the authenticity of both peers, the server and the client, using digital certificates).

When you start a transaction using 3-D Secure it initiates a redirection to the website of the card issuing bank to authorise the transaction.

This provides extra protection because correctly entering the security code during a purchase confirms that you are the authorised cardholder. If an incorrect security code is entered, the purchase will not be completed. Even if someone knows your credit or debit card number, the purchase cannot be completed without your security code. The process works in a similar way to a PIN number for your card.

A significant factor in adopting 3-D Secure is the reduction in disputed transactions and the handling and losses that come with those. Authenticated payment is expected to eradicate a substantial proportion of fraud, charge-backs and customer complaints.

Much harder to predict is the effect 3-D Secure is having on consumer confidence. Greater confidence should mean increased sales, so any steps your business takes to protect data will have a positive impact on your business.

3-D Secure is compatible with most online payment solutions although some high-risk accounts may require the addition of a ‘message passing interface’ (MPI).

Benefits of integrating 3-D Secure:

  • Minimal impact on merchant’s interaction with consumer
  • Customer confidence in your site’s security
  • Less risk of fraudulent transactions
  • Fewer disputed transactions

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