Checkout concerns slow merchants` use of online card authentication

Visa’s Verified by Visa and MasterCard’s more recent SecureCode program aim to reduce online payment fraud and boost transactions, but merchant adoption of the programs has a way to go. A recent report by Jupiter Research indicates that overall, merchant participation in the programs is somewhere between 2% to 20%.

Visa in the fall said it had signed up more than 8,000 credit card issuers and hundreds of merchants such as Overstock.com and 1800Flowers.com. SecureCode claimed more than 2,400 credit card issues and a half-dozen participating merchants such as OfficeMax and BlueNile.com. Both companies indicated they expected other merchants to join the programs shortly. Both programs have placed a high priority on increasing merchant adoption, according to Jupiter.

While the programs offer value to participating online merchants by transferring liability for any chargebacks associated with fraudulent transactions back to the card issuer, some merchants have been more concerned about their potential impact on checkout – read cart abandonment – than on their potential to reduce online fraud, Jupiter says.

Such concerns may relate more to earlier versions of the programs, however. Jupiter notes that Visa, for example, has worked to more tightly integrate its program with merchants` checkout pages for a smoother checkout process. To further boost program adoption by merchants, according to Jupiter, card associations should consider demonstrations that quantify their associated benefits of risk reduction against cart abandonment risk, such as by sponsoring split-run testing.

Wider adoption of the programs also could be spurred by initiatives such as one recently announced at Wells Fargo, which bundles Verified by Visa into an upgraded merchant processing service product, Jupiter notes. “The processing community would do well to follow Wells Fargo’s lead, making merchant integration much easier and facilitating more rapid merchant adoption,” Jupiter says.