Visa offers payment guarantee to e-retailers as part of new service
Seeking to entice merchants to adopt payment security measures, Visa International has approved rules that would relieve merchants of liability for fraudulent transactions if they collect a password from the cardholder as part of the Visa Authenticated Payment system.
Under the Verified by Visa program, cardholders will select passwords that they will provide when they make online purchases. Card-issuing banks will manage the passwords and verify them at the time of transaction. At checkout, a merchant will provide a window linked to the issuing bank in which the cardholder can enter a password. If the transaction and the password are authneticated by the issuer, the merchant will not be liable for any fraudulent transactions that result from the sale.
If the cardholder forgets or otherwise does not enter a password, and the merchant proceeds with the transaction anyway, the merchant then is 100% liable.
In addition, Visa has approved a discounted interchange rate on such transactions. Interchange is the amount of a transaction that the merchant’s bank pays to the card-issuing bank. Interchange is one of the bases on which merchant banks build the discount rate they charge merchants.
Visa believes that these incentives can reduce disputed Internet transactions by at least 50%. Visa has partnered with more than 60 Internet Solution Providers and management consulting firms to make the program available to merchants and banks around the world.
As part of this program, Visa International’s board in August adopted 3-D Secure as the new global authentication technology, in addition to 3-D SET. 3-D Secure is a new,
globally interoperable payment authentication solution that Visa says improves overall system integrity.
Visa also requires web merchants to post their privacy policy and transaction security capability on their web site so cardholders know what type of protections are in place when they shop online. Furthermore, the Visa International board has also approved a requirement that, effective January 1, 2002, web merchants must offer a secure, encrypted environment to cardholders during their online purchase. Any e-merchant
participating in Visa Authenticated Payment satisfies this requirement. By April 1, 2003, Visa acquirers will be required to support 3-D Secure for their online merchants.
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