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What is 3-D Secure Payer Authentication? Payer authentication enables all parties in an e-commerce payment transaction to transmit confidential and valid payment data, and provides verification to the merchant that the buyer is the authorized owner of a particular card account. 3-D Secure has been named by VISA and MasterCard because there are 3 interoperability domains involved in the authentication process. – Issuer Domain – Interoperability Domain – Acquirer Domain Also involved in the authentication process are the cardholder, the merchant, the payment gateway and the bank's processor Consumers: Once enrolled in 3-D Secure consumers can be protected from fraudulent use of their card at an Internet merchant site, this builds consumer confidence in the payment mechanisms online prompting greater use and increased spending. Merchants: Merchants benefit from chargeback liability shift on disputed payment transactions if they are enrolled in 3-D Secure and made an attempt to authenticate the cardholder during the payment process. The issuer nor the cardholder need to be enrolled in order for protection to be guaranteed! VISA supports chargeback liability shift on 3-D Secure attempts and completed authentication requests. MasterCard in USA and Canada do not support 'attempts' and require full UCAF authentication in order to transfer chargeback liability shift from merchant to consumer. MasterCard in EU, SAMEA, LACR and AP support CB liability shift on SecureCode 'attempts' on intra-regional transactions (cardholder and merchant in same region) if the SecureCode request is attempted (with or without completion) and a valid payment transaction authorisation is obtained. Potential problems with 3-D Secure: If issuers have implemented activation during shopping to facilitate enrollment for their cardholders, online activation will occur while shopping at a 3-D Secure enrolled merchant site. If the consumer selects to "activate now", the verification of the consumer's ID takes place first, however, failed attempts to either validate the consumer's ID or enrollment problems can cause the pop-up window to get "stuck" open and the consumer must exit manually or leave merchant site, resulting in lost sales. Communication (Internet) can be disrupted causing time-outs and browser session hanging resulting in a failed enrollment and potentially a lost sale. Many issuers have not adequately educated their cardholders about "activation during shopping" and thus the consumer thinks the merchant is requesting information through a pop-up box and exits the session. Consumers could have pop-up killers set on their browser to prevent the pop-up window from opening to initiate the process. The Internet connection between the consumer and the merchant could be disrupted (particularly dial up users) during the middle of the enrollment or authentication process causing the enrollment process to fail What are the benefits in using 3-D Secure? Merchant Benefits: Simple set up – no software to purchase, no merchant "plug-in" to install Immediate access to Verified By VISA and MasterCard SecureCode once enrolled Protection from consumer fraud losses, unauthorized transactions and disputes Chargeback liability shift for key CB reason codes – even on supported attempts Increased consumer confidence leading to increased sales Increased card acceptance over other payment methods – increased sales! Lower transaction costs – allowing for more competitive product pricing Greater income potential from reduced transaction costs and chargeback penalty fees MasterCard SecureCode and Verified By VISA programme benefits, marketing and support Acquirer Benefits: Better and cheaper than chargeback insurance! Immediate reduction in interchange costs for 3-D Secure authenticated ecommerce transactions – up to 40 basis points savings on 3-D Secure transactions – even attempted 3-D Secure transactions! Immediate reduction in credit risk, disputed transactions, chargebacks, exception handling expenses, and portfolio losses; Immediate reduction in back office costs and administration relating to retrieval requests, dispute handling, chargeback investigation and lengthy presentment cases Fast and easy enrollment – no MPI software to purchase – installation and certification are completed on the bank's behalf; Reduced capital expenditure in relation to other fraud management and detection services/software; Guaranteed liability shift from Acquirer to Issuer for key chargeback reason codes. Processor and Aggregator Benefits: Long term retention of 3-D Secure compliant merchants with Acquiring bank(s); Immediate reduction in disputed transactions, chargebacks, exception handling fees, and portfolio losses; Immediate reduction in penalty fees and fines associated with high chargeback merchants (>1%); More negotiable discount rates for 3-D Secure authenticated ecommerce transactions – immediate savings across the acquiring business portfolio; Fast and easy enrolment – no MPI software to purchase – installation and certification are completed on your behalf by FAC! Processor and Aggregator Benefits: "Pay as you Go" enrolment model – register one, some or all of your entire portfolio! Acquirers can decide which merchants to set up for 3-D Secure Reduction/elimination of high risk merchants from the Global Chargeback Monitoring Programmes; Overall improvement in merchant portfolio and profitability FAC's 3-D Secure Service - cGate SecureVerify First Atlantic Commerce licensed MPI source software from a certified vendor in the UK – CardTech Limited First Atlantic Commerce installed the MPI so that 3-D Secure could be provided to merchants whether they use FAC's payment gateway services or not; First Atlantic Commerce is the first certified 'service provider' of 3-D Secure solutions in the LACR
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