Mastercard SecureCode is a program made to give cardholders, and online merchants added security at checkout.
Mastercard introduced SecureCode as a way to protect ecommerce merchants and cardholders. We will go over how Mastercard SecureCode works, how merchants can implement it on their site, and how it protects merchants from fraud.
What is Mastercard SecureCode?
Mastercard SecureCode is a program made to give cardholders, and online merchants added security at checkout. When a merchant has SecureCode as part of their checkout process, the cardholder will be prompted to type in a code, similar to a PIN, on an issuer prompted screen before the transaction can be completed. As soon as the issuing bank approves the SecureCode, the transaction will be accepted.
SecureCode protects merchants against Cardholder Unauthorized and Cardholder Not Recognized disputes because the approval of the SecureCode gives compelling evidence that the transaction was completed by the true cardholder. On the cardholder side, it protects customers against fraud without adding too much friction to the checkout process. Similar to a PIN-protected debit card, cardholders can feel like their card has a layer of protection against fraudulent purchases.
How Can Merchants Enable Mastercard SecureCode?
The first thing that merchants should do it check if SecureCode is available through your transaction processor. Mastercard explains these steps:
- “Contact your transaction processor to confirm that they support the Mastercard SecureCode program.
- Install a Mastercard SecureCode compliant "plug-in" application on your site.
- Test your site with Mastercard to ensure that SecureCode is working properly.
- Display the Mastercard SecureCode logo to let your customers know that you are working to secure online shopping.
- Transmit transaction authentication values to the card issuer via your normal authorization process using the Universal Cardholder Authentication Field (UCAF).”
SecureCode Benefits for Merchants
Dispute Fraud Types
There are three types of fraud when it comes to disputes:
Friendly Fraud - When a cardholder mistakenly disputes a purchase they actually made. Simple forgetfulness, unclear merchants descriptors, or family members making an unknown purchase can all be at the root of friendly fraud.
Chargeback Fraud - When a cardholder maliciously uses the chargeback process to regain the transaction amount while still retaining the goods or services.
True Fraud - When a fraudster uses stolen card credentials to make a purchase, then the true cardholder disputes the charge.
Friendly fraud and chargeback fraud disputes can both be won be merchants. Merchants will need to compile compelling evidence into a dispute response. If the merchant wins the dispute, the transaction amount will be returned to the merchant’s account. On the other hand, true fraud disputes are unable to be won by merchants, so it is important to set up safeguards to prevent these types of disputes.
Preventing True Fraud
It is the merchant's responsibility to stop the acceptance of fraudulent purchases. So merchants should do everything they can to prevent fraudulent transactions and disputes from happening. By providing SecureCode can deter true fraudsters from attempting to use the card at checkout.
Compelling Evidence for Friendly and Chargeback Fraud
Friendly fraud and chargeback fraud disputes are winnable because the cardholder is not using the dispute process properly. These types of fraud slip through front end fraud filters because it is the true cardholder making the purchase. To win these disputes, merchants must create a dispute response based on the specific reason codes. When a customer gives the correct SecureCode at checkout, it provides merchants with protection from Cardholder Unauthorized and Cardholder Not Recognized disputes. By providing evidence that the cardholder gave the correct SecureCode at checkout gives merchants very strong evidence against the cardholders claim that they did not authorize or did not make the purchase.
More Protection for Ecommerce Merchants
Ecommerce merchants are naturally more at risk for fraudulent purchases and fraudulent disputes. So it is important for ecommerce merchants to constantly be finding ways to prevent fraud and still provide great customer experience and checkout process. Mastercard SecureCode can help with this goal.