What is Verified by Visa and 3D Secure?

Sydney VaccaroFraud Prevention1 Comment

What is Verified by Visa and 3D Secure
Verified by Visa helps merchants add more security at checkout and keeps the checkout process as smooth as ever.

While merchants should always look for ways to reduce the risk of fraud, it is possible to put too much protection in place. Excessive fraud prevention measures can create too much friction at check out, turn away legitimate customers, and create a loss of sales. So, what can you do to prevent fraud while still creating a frictionless experience for customers?

Verified by Visa helps merchants add more security at checkout and keeps the checkout process as smooth as ever. We will go over what Verified by Visa is, how it works, and how it prevents true fraud disputes.

What is Verified By Visa?

Verified by Visa was created to make the ecommerce shopping process safer for both consumers and merchants. By adding additional factors that made sure it was indeed the cardholder making the card-not-present transaction it helps prevent true fraud disputes. This program has had two different versions released: 3D Secure 1.0 and 3D Secure 2.0. So let's get into how it works.

3D Secure 2.0

3D Secure 2.0 allows merchants and issuers to validate customer without interrupting the normal flow of the checkout process. When a cardholder enters their information at checkout, the merchant's 3D Secure provider will pass that data to the issuer through an authorization request. The issuer’s 3D system will then assess the transaction risk. If the transaction looks normal, they will authorize the purchase. If something seems off about the transaction, then the issuer will prompt the cardholder to enter their password.

The updated 3D Secure 2.0 allows ten times as much data to be communicated between the merchant and the issuer. This can include information such as device channel, payment history, and more. In the previous version of 3D Secure, customers would have to validate their purchase by using a personal code every time. With this enhanced communication, merchants and issuers can use the data they have to verify the customer, rarely having to add friction to the checkout process. The customer does not ever realize these security checks are happening.

How Does 3D Secure 2.0 vary from 1.0?

When 3D Secure was first created, it was designed with only browser-based shopping on a personal computer in mind. As the number of shopping devices increased, such as mobile phones and tablets, it created more friction in the process. Also, the use of static passwords created a pain point for customers, issuers, and merchants. These pain points resulted in improvement to 2.0, such as:

  • Smoother usage over many payment channels, including mobile web, in-app, and digital wallet.
  • Merchants can integrate the verification process into the shopping experience, which creates less friction at checkout.

Even though 3D secure 2.0 is by far the better version, Visa recommends that issuers and merchants support both the 1.0 and 2.0 specifications for the following reasons:

  • "Supporting both versions will ensure that stakeholders can initiate and respond to either authentication message version and maximize authenticated transactions
  • To implement 3-D Secure 2.0, merchants' 3-D Secure Server and issuers' Access Control Server software must support the updated 3-D Secure 2.0 specifications
  • Merchant 3-D Secure Server providers will manage the initiation of authentication requests according to the 3-D Secure version(s) supported by the issuer."

What is True Fraud?

True fraud is when a stolen credit card is used by a fraudster and accepted by a merchant. This results in the true cardholder disputing the transaction. It is the merchant's responsibility to prevent the use of stolen credit card at their store or site. So when a dispute is true fraud, merchants are unable to win the dispute and regain their money. The inability to win true fraud dispute is why it is so vital for merchants to put in place tools like Verified by Visa.