Credit Card Security Systems: 3-D Secure™ and SecureCode™

Many Ecommerce merchants and credit card holding online consumers are concerned with credit card fraud. CNP transactions and with them credit card fraud cases have become too popular lately. CNP stands for Card-Not-Present. CNP transactions let consumers purchase anything from any online store that is implemented with a credit card processing facility without physically swiping their credit cards through physical processors. The CNP transaction system has become so popular that in the US there are online grocery stores which let consumers buy bread and milk and have them delivered home! But as the process is not physical, and everything passes through wires, carders (credit card system hackers) have a chance to commit credit card fraud pretty easily if they are armed with the necessary information about the owner of the card.

Credit card fraud may ruin the lives of consumers, who may receive huge bills, and the lives of e-Commerce merchants, who may get bombed with chargeback fees. A chargeback fee is a fee that the e-Commerce merchant will have to pay a consumer if a fraudulent CNP transaction occurs using his credit card. The fee will have to cover the full sum of money that was spent fraudulently, and, usually a percentage of the chargeback to the bank, which was put to inconvenience too. Concerned by the high number of chargeback and credit card fraud cases credit card companies have designed a security system to minimize the amount of unsanctioned CNP transactions.

Two of the most powerful, most-known, most-accepted and successful credit card
providers have their own solutions. Visa’s 3-D Secure™ and MasterCard’s
SecureCode™. Both systems are based on a payment authentication process
where a cardholder making a purchase is verified to be the real cardholder.
Both of these systems were designed to increase the confidence of e-Commerce
merchants and their consumers in CNP transaction.

Visa’s 3-D Secure™, a key component of The Visa Authenticated Payment Program, adds extra security protection to SSL (secure socket layer) secure forms. The 3-D Secure™ system is supposed to decrease the number of chargeback disputes and fraud cases by 80%.

So, how does 3-D Secure™ work? 3-D Secure™ technology has a two stage enrollment and verification process. The first stage is called the ’enrollment stage’ and takes place at Visa’s Authenticated Payment Program 3-D Secure™ website. At this stage the cardholder is asked for relevant and auxiliary personal information, a password, and/or a Personal Assurance Message, which will then be asked when he makes CNP purchases online. The cardholder’s details are registered in the 3-D Secure™ database (or the Access Control Server) after verification.

The e-Commerce Merchant is provided with a 3-D Secure™ system plug-in, called 3-D Secure Merchant Server Plug-in. This plug-in is integrated into the e-Commerce Merchants credit card processing system. When a consumer is ready to purchase a product from your online store and enters his credit card information he will be asked for auxiliary personal information, a password and/or a Personal Assurance Message. The information will then be verified at the Access Control Server directly from the cardholder’s browser and not through the merchant’s website, which will decrease the risk of information leakage and spoofing.

The benefits or Visa’s 3-D Secure™ are clearly seen: high level of security for consumers, a significantly lower chance of chargeback and credit card fraud, and overall confidence in CNP transactions.

As for MasterCard’s SecureCode™ is resembles Visa’s 3-D Secure™. MasterCard credit card holders register at MasterCard’s SecureCode™ website and asked to provide a personal secure code, which will then be asked for when purchasing online. When at the checkout, the consumer is asked for his personal secure code by the SecureCode™ system implemented in the e-Commerce merchant’s online store. SecureCode™ also has a Personal Greeting technology. When consumers are asked for their secure code they will see their Personal Greeting, if they do not see or see a different Personal Greeting they will know that it is insecure to enter their secure code. The Personal Greeting is set up when registering in the SecureCode™ system. 60% of all CNP chargebacks are caused by unsanctioned credit card use and credit card fraud and MasterCard’s SecureCode™ technology is supposed to significantly cut down the amount of chargebacks and fraud cased.

The benefits for e-Commerce merchants using Visa’ 3-D Secure™ and MasterCard’ SecureCode™ technologies are:

1. Sufficient decrease in chargebacks, which are a real pain for all e-Commerce merchants worldwide;
2. Decrease in credit card fraud;
3. Easy and fast incorporation into any existing e-Commerce credit card processing system;
4. Increased consumer reliability and significant increase in sales.

The benefits for consumers who make purchases at e-Commerce online stores bearing
the 3-D Secure™ or SecureCode™ logos, thus using 3-D Secure™
or SecureCode™ for safe processing are:

1. Increased reliability and insurance in the e-Commerce merchant, without fear of revealing credit card information;
2. Does not require any installation of client-side software, everything is processed online through the consumers internet browser;
3. The ability to take advantage of CNP transactions to fully discover the world of online shopping, without fear of credit card fraud.

3-D Secure™ and SecureCode™ will definitely improve the world of e-Commerce and CNP online shopping.