MasterCard brands its version of the system as "MasterCard SecureCode" and Visa call its "'Verified by Visa". In practical terms, using 3D Secure means that during the checkout process an online buyer will be passed to a secure website operated by MasterCard or Visa where they will be asked to provide certain security codes. Buyers must either have previously signed up for MasterCard SecureCode or the Verified by Visa scheme as appropriate. Alternatively, they can sign up for the first time during the checkout process.

The process provides an extra level of authentication to combat card fraud. 3D Secure has been publicised as shifting the liability for fraud from the merchant to the card issuer but Green Jersey warns that the conditions under which liability actually shifts can be rather limited. Introducing 3D Secure into an e-commerce website's automatic payment processing mechanism should certainly not be seen as a universal solution, and website owners should continue to use their existing security and anti-fraud measures.

Until recently the use of 3D Secure has usually been voluntary, but all the major card issuers are expected to make the scheme compulsory during 2007. The benefits of implementing 3D Secure are:-

• Liability shift from merchant to card issuer.
• Reduction in card fraud.
• Most Actinic e-commerce websites will not need to be modified to accommodate the new system.

However, Green Jersey believes store owners should be aware of some disadvantages too:-

• Buyers are largely unaware of 3D Secure. Research has shown that the unfamilar extra steps that it adds to the checkout process can cause buyers to abandon their purchases.
• As mentioned above, liability shift is not always achieved.
• Some online card processing services will charge merchants for what they will position as a new service.

Much like the introduction of Chip and PIN for "cardholder present" transactions, Green Jersey believes that there will be initial confusion and resistance to 3D Secure from buyers. However, with the anticipated national publicity campaign and with increased familiarity with the scheme it is inevitable that buyers will accept it and appreciate that it actually helps to protect them.

We'll add another blog article on 3D Secure as the scheme is rolled out further during the year.