Target.com has become one of the first e-retailers to adopt Visa USA’s new online payer authentication system, “Verified by Visa.” Beginning in the fall, Visa cardholders will be able to enroll in the program through participating banks. Registered cardholders will then be asked to enter a password when making purchases online at target.com, a process that will take seconds, similar to how a signature serves to verify cardholder authenticity in stores or a PIN verifies the identity of a cardholder at an ATM.
A key benefit to merchants who use the service is that the use of the password assures that the person using the card to purchase online is the actual cardholder. The password is known only to the issuing bank and the cardholder. Since the password is never entered into the merchant’s database, anyone attempting to use the card number fraudulently online without providing the password would be unable to do so, says a Visa spokeswoman. As the authentication process reduces the risk of fraud, increased consumer confidence could increase spending online, she says, and reduce chargebacks for fraudulent transactions. However, interchange fees for merchants who use the new online authentication system will remain the same, she adds.
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